the ability of the economy to produce increasing quantities of goods and services
Economic Growth Impact
Demand for products and services will increase and therefeore increase a firm's cash flow and valuation--Stock
Firms expecteconomic conditions to improve they will expect higher cash flows, accept more projects, and demand more funds causing outward shift in the demand curve. Supply curve may not shift. Interests rates will rise
Strong economic growth places upward pressure on the required rate of return, the risk-free rate will go up
what are the 4 determinants of economic growth?
1. natural resources
2. human resources
3. capital formation
4. technology and innovation
Economic Factors for Population Growth
low developed countries--more children can work early
high developed countries--less children can work early
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