Franchise's affects on economic growth:

Franchise businesses bring growth in city, state and on national level. Their contribution in
creating jobs is in every economy. On a local level, franchises provide opportunity to the labor
force to work in different areas.
Franchises help the economy to generate a handful amount of revenue at different levels. For
example, There are 733,000 franchises in the U.S.A and they directly generate 7.6 million jobs.
Franchises directly account for 13.3 million in GDP.

What is Economic Growth:

An upsurge in the production of economic goods and services, equated from one period of time
to another in called Economic growth. Usually, aggregate economic growth is measured in GNP
and GDP terms. It can be measured in both nominal or real terms.

Understanding the Economic Growth:

Simply, Economic Growth is an increase in aggregate production in the economy. Usually, but
not essentially, An Increased average marginal productivity correlates with aggregate gain in
productivity. Which means a better income, that will encourage buyers to spend more. Hence,
the quality and standard of life gets better.
In macroeconomics, the growth generally exhibits as a function of human, physical, labor and
technology capital. Things that will lead to an increase in economic growth are increase in
quantity or quality of the working age population, methods of combining labor, raw material and
capital and the tools they have.
Small business also increases the Economic Growth. Business generates profit that helps the
stock prices to rise. This gives companies more capital which encourages them to hire more
employees. Income rises as more jobs are produced. Additional products and services can be
bought by the money. Purchases drive higher economic growth. Due to these reasons, every
country wants positive economic growth. Hence, the economic growth is the most-watched
economic standard.

Phases of Economic Growth:

Economists try to grab the data of growth to understand in which phase the economy is of the
business cycle. Expansion is considered as the best phase. This phase is when the economy is
growing at a maintainable rate. But if the growing rate is way ahead of a healthy rate, it
overheats. That creates an assets bubble. This is the peak phase in the business cycle.
At some point, when people continue to sell more than buying, confidence dispels in the
economy, the economy contracts. When this phase goes along, it's a recession. These recessions
of the economy's depression last for a decade. This happened only during the Great Depression
of 1929.
Following chart shows the different phases of American economy from 2005 till 2018.

The growth of American economy was because of their factors of production and technological
advancements.

The economic growth rate:

Percentage change in real gross domestic product from one year to the previous one. Formula to
determine the rate is:

Importance of Economic Growth:

It leads to an increase in the incomes of workers and firms. It helps the government to generate
more taxes that will be spent on the public. It helps the government to reduce its debts. Economic
growth helps the government to lower the unemployment rate which will help to reduce absolute
poverty.

Economic growth effects on Incomes:

Income is the amount of money that is earned by an individual. Further on total income gets
divided into two components according to the desire. Those two components are Consumption
and saving. In economics, it is shown as Y = C + S.
As the result of economic growth in an economy, individuals will be receiving higher wages. As
of the result, their consumption and saving decisions will be affected.
Their expenses will rise and they will be spending much more money than they were previously.
Also, due to the higher income they will be having a greater amount of money left then
previously after their consumption.

Consumption and Saving:

The term consumption denotes the spending of money or assets. While, the saving represents the
preservation of money or assets. By nature, both of these terms are completely opposite. It is a
natural phenomenon that we try to spend our present income to meet current expenses. If there is
something that remains from the income, it is saving.

Theory of Consumption:
Consumption can be defined as the final purchase of good and service. We can also refer to it as
the consumer spending. Consumption is considered as the biggest factor for the economy
because it measures the economic growth of a country. A business won’t stay long in an
economy where the consumption is low.

States Affecting Consumption:

There are such things that economists think affect the consumption.
1. Price: Consumption will go high if the prices go down.
2. Income: Income= Consumption + Saving, so if the income of individuals rises, the
consumption will rise.
3. Taxes: Government can earn more by taxes because the public is willing to pay more.
4. Saving: If people are more future orientated, they will save more hence the consumption
will fall.

Concept of Saving:
For some it may be money deposited in the bank, to some it might be investment in share but to
economists it is the reserving of the resources in present for future consumption. It is the most
important factor in the long-term economy.

Types of saving:
1. Personal Saving: When an individual tries to consume less in order to save from his
current income. These savings are saved in banks or invested in shares, bonds or real
estate.
2. National Saving: When we add up our personal saving, business saving and public
saving it is considered as National saving. Business saving can be measured by corporate
saving. Public savings are just simply taxes.

Sources: www.investopedia.com/terms/e/economicgrowth.asp