Mod 37_ Long-Run Economic Growth.docx - Sousa 1 Mod 37 Long-Run Economic Growth Real GDP per Capita Economic growth is tracked via the real GDP per

Mod 37_ Long-Run Economic Growth.docx - Sousa 1 Mod 37...

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Sousa 1December 15, 2016Mod 37: Long-Run Economic GrowthReal GDP per Capita-Economic growth is tracked via the real GDP per capita, the real GDP divided by population -Focus is put on real GDP per capita because we want to isolate the changes in population-Income of a regular family usually increases and decreases as real GDP per capita doesGrowth Rates-Long-run economic growth is normally a gradual process in which real GDP per capita grows at most a few percent per year-TheRule of 70 tells us how long it takes real GDP per capita to double by dividing 70 by the annual growth rate-This can only be applied to a positive growth rateThe Crucial Importance of Productivity-Long-run economics relies largely on productivity, but a number of factors influence productivity -Sustained growth in real GDP per capita occurs only when the amount of output produced by the average worker increases-Productivity--output per worker--is simply real GDP divided by the number of people working-The term labor productivity refers to output per worker, or output per hour-

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