Summarize 2 chapters Essay Example | Topics and Well Written Essays - 250 words

Summarize 2 chapters - Essay Example The production capacity of a country or community is determined by the marginal propensity to consume out of the disposable income. However, the degree of economic growth and development is also influenced by other variables including fiscal and monetary policies, capital stock, and technological progress. The productive capacity is also affected by other economic and environmental factor and existence of adequate resource capacity. According to the Neoclassical economist (in their growth model), economic growth rate will significantly decline with the maturity of the economy as investment resources are mainly used in replacing the depleted sectors of the economy. As more resources/capital stock is injected into the economy and with a significant growth in technology, the economy would expand irrespective of the investment and savings multipliers (Michael, 2004). The production capacity of an economy is also boosted by the marginal propensity to save and invest. In summary, this chap ter focuses on the productivity of the economy and the possible factors or theories behind