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The efficiency factor is the sixth ingredient of economic growth. It is used to reach its full production potential, an economy must achieve economic efficiency as well as full employment. The economy must use its resources in the least costly way (productive efficiency) to produce the specific mix of goods and services that maximizes people's well-being (allocative efficiency).
The supply, demand, and efficiency factors in economic growth are related. Unemployment caused by insufficient total spending (demand factor) may lower the rate of new capital accumulation (supply factor) and delay expenditures on research (supply factor). Conversely, low spending on investment (supply factor) may cause insufficient spending (demand factor) and unemployment. Widespread inefficiency in the use of resources (efficiency factor) may translate into higher costs of goods and services and thus lower profits, which in turn may slow down innovation and reduce the accumulation of capital (supply factor). Economic growth is a dynamic process which the supply, demand and efficiency factors all interact.
Definition-
Efficiency Factor - is the capacity of an economy to combine resources effectively to achieve growth of real output that the supply factors of growth make possible
What else can I help you with?
What are the 6 determinants of economic growth?
1 demand factor, 4 supply factors, and 1 efficiency factor.
Why is the economic efficiency of market economies important?
it is major factor in nation's wealth
What economic growth factor involves human resources?
Capital Goods
What are the seven major goals of the US economy?
Full Employment Economic Growth Price Stability Economic Freedom Economic Security Economic Equity Efficiency
Is Capital is a factor of production?
improves efficiency, increases output, and provides for growth.
What are the 6 determinants of economic growth?
1 demand factor, 4 supply factors, and 1 efficiency factor.
What factor besides the plague delayed the renaissance in Northern Europe?
lack of economic growth lack of economic growth lack of economic growth
Why is the economic efficiency of economies important?
it is major factor in nation's wealth
The growth of towns was one factor in the growth o this economic activity?
commerce
Why is the economic efficiency of market economies important?
it is major factor in nation's wealth
What factor is encouraging economic growth in bulgaria?
Agronomy and food sector
What economic growth factor involves human resources?
Capital Goods
What are the seven major goals of the US economy?
Full Employment Economic Growth Price Stability Economic Freedom Economic Security Economic Equity Efficiency
Is Capital is a factor of production?
improves efficiency, increases output, and provides for growth.
Four criteria for judging economic outcomes?
efficiency, equity, economic growth, and stability
What are 4 economic goals for a country?
1) Full employment 2) Price Stability 3) Economic Growth 4) Efficiency in production
Which economic factor has helped in the growth of the food service industry?
thermal
