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The problem of economic growthIf productive capacity grows, an economy can produce progressively more goods, which raises the standard of living. The increase in productive capacity of an economy is called economic growth. There are various factors affecting economic growth. The problems of economic growth have been discussed by numerous growth models, including the Harrod-Domar model, the neoclassical growth models of Solow and Swan, and the Cambridge growth models of Kaldor and Joan Robinson. This part of the economic problem is studied in the economies of development. Needs and wants problemsNeeds are things or material items of peoples need for survival, such as food, clothing, housing, and water. Everyone has a different needs and wants. Until the Industrial Revolution, the vast majority of the world's population struggled for access to basic human needs. Wants are effective desires for a particular product, or for something that can only be obtained by working for it. While the fundamental needs of survival are key in the function of the economy, wants are the driving force that stimulates demand for goods and services. To curb the economic problem, economists must classify the nature and different wants of consumers, as well as prioritize wants and organize production to satisfy as many wants as possible. Five bases problems of economyIn our societies, in general, our societies will have these similar problems The following points highlight the five basic problems of an economy. The problems are: 1. What to Produce and in What Quantities? 2. How to Produce these Goods? 3. For whom is the Goods Produced? 4. How Efficiently are the Resources being Utilised? 5. Is the Economy Growing?. Problem 1: What to Produce and in What Quantities?The first central problem of an economy is to decide what goods and services are to be produced and in what quantities. This involves allocation of scarce resources in relation to the composition of total output in the economy. Since resources are scarce, the society has to decide about the goods to be produced: wheat, cloth, roads, television, power, buildings, and so on. Once the nature of goods to be produced is decided, then their quantities are to be decided. How many tonnes of wheat, how many televisions, how many million kws of power, how many buildings, etc. Since the resources of the economy are scarce, the problem of the nature of goods and their quantities has to be decided on the basis of priorities or preferences of the society.

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9781653715961

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