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study guide - Todd Snyder ECON 205 Ch 7-12 Midterm 2 Study...

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Todd Snyder ECON 205 Ch 7-12 Midterm 2 Study guide Ch 9 I. The Causes of Economic Growth a. Precondition for economic growth 1. Markets 2. Property Rights 3. Money exchange ii. Incentive must pursue 1. saving and investment in new capital a. increases capital per worker and productivity 2. investment in human capital a. increased productivity and technological advance 3. discovery of new technology a. increase in capital and GDP growth II. Growth Accounting a. Aggregate production function i. GDP = F(L, K, T) 1. GDP determined by a function of Labor Capital and Technology b. Labor Productivity 1. real GDP per hour of labor 2. =Y/L c. Productivity Curve i. Capital per hour of labor and real GDP per hour of labor ii. Technological advancement shifts curve upward iii. Law of diminishing returns 1. the more capital the less increments GDP increases by d. Solow’s 1/3 rule i. 1 percent increase in capital per hour of labor brings a 1/3 increase in real GDP per hour of labor ii. The rest of the percent change in real GDP comes from technological change e. Technological change during the productivity growth slowdown i. Energy price shocks 1. research efforts more towards saving energy then increasing productivity ii. Environment 1. laws protecting environment and quality of workplace f. Achieving faster growth 1. either increase growth rate of capital per hour of labor or technological advancements ii. stimulate saving 1. more saving more investment more capital growth
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iii. Stimulate Research and Development
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This note was uploaded on 02/27/2008 for the course ECON 205 taught by Professor Kamrany during the Fall '07 term at USC.

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study guide - Todd Snyder ECON 205 Ch 7-12 Midterm 2 Study...

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