(Bonus question: how does an economy stops growing? If it’s possible)
EDIT: Thank you all for your help. This is def more helpful and fun than good ol’ lessons.
In: Economics
Economists talk about two main causes for economic growth:
-Population growth: If an economy has more people, it will generally make more stuff. These people will also want to consume more stuff, so from a quality-of-life standpoint, it mostly washes out. Populations have historically tended to grow rather than stay steady or shrink, but that doesn’t have to be the case. Some technologically-advanced countries actually have shrinking (native) populations for complicated and somewhat mysterious reasons.
-Technological growth: People can make more if they have better tools/techniques. Technological advancement generally allows people to consume more because you’re adding to the pile of things to consume but not to the line of people who want to consume them. With the exception of things like the Dark Ages, technology’s contribution to the economy should never shrink. Once we make a breakthrough, we keep it forever.
Thus an economy will only be in steady state if the population is falling at precisely the right rate to counteract technological progress. Even in that world, modes of production and consumer living standards will be constantly improving.
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