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Other benefits include increased opportunity for investment, increased business success and confidence .
Reasons for growth are complex and numerous. Basically, Growth comes about as a result of the increased efficiency in the use of resources or Factors of Production. There are a few factors that can directly affect the levels of growth. .
Invest Capital Investment into a firm or an economy that provides the opportunity for development, expansion, research, and possible higher levels of Productivity. These ties in with the second, Technological Advances. These lead to the availability of better equipment, which improve the manufacturing of goods or services, or help to create better ways of managing jobs and people. Investment can also be stretched to link with the third factor, Education and training. Education and training work to make people more productive and effectively, act as investments into what is known as Human Capital'. These three interlinked factors have significant effects on growth rates. .
Every government uses various policies based around the afore-mentioned factors to try to increase or at the very least stabilize growth rates. .
Interest Rates have a huge and outward rippling effect on the whole economy. Firstly a reduction in Interest Rates would discourage saving as the returns on a sum of money in the bank would decrease. Therefore spending by the individual would increase. This is supplemented by the fact that it would be cheaper to borrow money as loans are cheaper to pay off if the interest rates are lower. .
This includes mortgages on houses, so for homeowners, the good news would be more disposable income. Of course, Loans would become cheaper to business firms also, so perhaps they would be more encouraged to make those large capital investments, in research and development - buying more up to date equipment etc. that higher interest/payback rates had made seem an unsavory prospect.
