Chapter 10

Chapter 10 - Chapter 10: Long-Run Economic: Sources and...

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Chapter 10: Long-Run Economic: Sources and Policies Economic Growth Over time and Around the World Economic Growth from 1,000,000 b.c. to the present o Industrial Revolution: the application of mechanical power to the production of goods, beginning in England around 1750 o During ancient times there was much slower growth rate because there was no technology and as time passed people invented ways to produce more goods and services in a more efficient way o Why did the industrial revolution start in England? Because the British were the ones who enforced the rule of law and gave incentives to individuals In that year British parliament had some economic power over the people/king, which means it gave taxes which gave way to technology Small differences in Growth Rates are Important o In the long run, small differences in economic growth rates result in big differences in living standards o When you talk about growth rate it really means annual average growth rate They use this annual growth rate to measure/see the business cycle from one year to another By using an average you can somewhat estimate what will happen in the future Making the Connection o The Benefits of an Earlier Start: Standards of living in China and Japan If rapid economic growth continues in China, its standard of living will begin to approach those in the United States and Japan Overall, though, Japan has better standard of living but China seems to be catching up to Japan Why do Growth Rates Matter?
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o Growth ratter because an economy that grows too slowly fails to raise living standards “The get richer and…” o In the 1980s and the 1990s, a small group of countries, mostly East Asia countries such as South Korea, Taiwan, and Singapore, experienced high rates of growth and are sometimes referred to as the newly industrializing countries What determines how fast Economies Grow? Economic growth model : a model that explains changes in real GDP per capital in the long run Labor Productivity : the quantity of goods and services that can be produces by one worker or by one hour of work o Economist believe two key factors determine labor productivity: the quantity of capital per hour workers and the level of technology The higher the level of technology the more productive you will be Technological change
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This note was uploaded on 04/14/2009 for the course ECO 2013 taught by Professor Sabet during the Summer '08 term at FIU.

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Chapter 10 - Chapter 10: Long-Run Economic: Sources and...

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