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As a society, our standard of living depends on our ability to produce goods and services (Mankiw, 2012). The ability to produce these goods and services depends on several factors including physical capital, human capital, natural resources, and technology (Mankiw, 2012). The government plays an important role in an economy’s growth rate. They achieve their influence on the growth rate through their implementation of several government policies. These policies not only influence the economy’s growth rate, but also play a significant role in day-to-day life.
Government policies on savings and investments play an important role in influencing both the economic growth rate and day-to-day lives. A country’s saving and investing rates are connected very closely with that country’s economic growth rate (Kotlikoff, 2008). This is also tied to the population growth in an economy. The younger the workforce the more they will be saving for retirement, instead of spending their retirement (Kotlikoff, 2008). This leads to a positive saving rate. In a country with a growing economy,…
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