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Assignment Nos. 7/ Production and Growth

Submitted by: Ciara Castañeto Submitted to: Prof. Aj Orencia

Date Submitted
April 16, 2021

Section Schedule
Wednesday 4:00-5:30PM
1. How do you think does production help the economy grow? Give an example and
explain your answer.

Since 1947, productivity gains have enabled the American business sector to
manufacture nine times more goods and services with just a slight increase in hours
working. An economy's competitiveness grows as it is able to produce—and
consume—more products and services with the same amount of effort. Increases in
production can only be attributed to higher inputs or more efficient use of such inputs
in the manufacturing process. Increases in imports raise costs on society: more
energy means less free time; more infrastructure spending means lower existing
consumption; and more commodity inputs means dwindling natural resource reserves.
We may increase production without increasing inputs and incurring these costs by
increasing productivity. Increases in labor productivity are critical to economic
development in the United States, as shown by historical or "time series" statistics on
production and hours employed. Since 1947, productivity gains have enabled the
American business sector to manufacture nine times more goods and services with
just a slight increase in hours working. An economy's competitiveness grows as it is
able to produce—and consume—more products and services with the same amount
of effort. Individuals (workers and consumers), corporate executives, and experts both
value productivity (such as policymakers and government statisticians).

As an example of how the production help the economy to grow, an increase in a

country's output of goods and services is known as economic development. If a
country's gross domestic product (GDP) per person rises, this is an indicator of
economic development. The increase in a country's economic production. Ireland's
economy grew significantly as a result of inward investment.

2. How does production and growth are related to each other? Compare and contrast.

Although the two are not equal, the rate of growth of an economy's production is
directly related to the rate of growth of its GDP per capita. For example, as the
proportion of the workforce employed in an industry rises, GDP per capita rises as
well, but individual worker productivity will not be affected. A country’s standard of
living depends on its ability to produce goods and services. Within a country there
are large changes in the standard of living over time. In the United States over the
past century, average income as measured by real GDP per person has grown by
about 2 percent per year.
Productivity refer to the amount of goods and services produced for each
hour of a worker’s time. A nation’s standard of living is determined by the
productivity of its workers. Living standards, as measured by real GDP per person,
vary significantly among nations. The poorest countries have average levels of
income that have not been seen in the United States for many decades. Annual
growth rates that seem small become large when compounded for many years.
Compounding refers to the accumulation of a growth rate over a period of time.
Only by the quality and quantity of the inputs of production, which are divided into
four categories: property, labour, money, and entrepreneurship, can the economy
expand. The materials used to create or manufacture a good or service in an
economy are known as factors of production. If firms will increase the reliability of
their manufacturing factors, it stands to reason that they would be able to produce
more products of better quality at a lower cost. Any rise in production contributes
to economic growth, as determined by GDP. GDP is merely a statistic that
measures the net output of all goods and services in an economy. By cutting prices
and rising incomes, improved economic performance increases the quality of
living. Technological advancements such as iPhones, cloud computing, and hybrid
vehicles are examples of capital goods. For example, in recent years, fracking or
horizontal drilling technology has increased oil production, making the United
States one of the world's largest oil producers. The innovation couldn't be done
without the labor behind the process, from conceptualization to the finished
product. However, as technology helps to increase the efficiency of the factors of
production, it can also replace labor to reduce costs. Artificial intelligence and
robotic machines, for example, are used in manufacturing to increase productivity,
reduce costly human errors, and lower labor costs. Of course, nothing gets started
unless the entrepreneurs create a vision and the necessary action steps to design
the manufacturing process.

References:
U.S. Bureau of Labor Statistics. (2019). Retrieved from Bls.gov website:
https://www.bls.gov/k12/productivity-101/content/why-is-productivity-
important/home.htm
Thomas, C. (2015, July 22). Production and Growth. Retrieved March 13, 2019,
from Slideshare.net website: https://www.slideshare.net/bgsuswim79/production-
and-growth