ECO 2013 (McConnell v21) - Ch8 with graphic.ppt - ECO 2013 Chapter 8 Economic growth ECO 2013 – Chapter 8 I • DEFINITION Economists define economic

ECO 2013 (McConnell v21) - Ch8 with graphic.ppt - ECO 2013...

This preview shows page 1 - 8 out of 32 pages.

ECO 2013 Chapter 8 Economic growth
Image of page 1

Subscribe to view the full document.

FSW ECO-2013 McConnell V21 nikishin 2 ECO 2013 – Chapter 8 I. DEFINITION Economists define economic growth as either AN INCREASE IN REAL GDP OCCURRING OVER A CERTAIN PERIOD OF TIME, FOR EXAMPLE ONE QUARTER or AN INCREASE IN REAL GDP PER CAPITA OVER A CERTAIN PERIOD OF TIME note: real per capita GDP is found by dividing real GDP by the size of the population
Image of page 2
FSW ECO-2013 McConnell V21 nikishin 3 ECO 2013 – Chapter 8 The first definition is used for reporting growth rates The second definition is used when comparing the standard of living [note: because distribution of income is not considered while calculating GDP, the standard of living as manifested by GDP is a "theoretical standard of living". If 95% of income is restricted to 5% of population then the standard of living of the rest 95% of the population is quite different from the "GDP per capita". (See preceding session)]
Image of page 3

Subscribe to view the full document.

FSW ECO-2013 McConnell V21 nikishin 4 ECO 2013 – Chapter 8 II. ECONOMIC GROWTH ENABLES A NATION TO ATTAIN ITS ECONOMIC GOALS MORE READILY. To calculate the approximate years in which GDP will double divide number 70 by the annual percentage of growth Example: at 3% annual growth US GDP will double (70 / 3) in 23 years at 8% annual growth Russia's GDP will double (70/8) in 9 years [note: limitation of GDP as manifestation of the standard of living refers to both countries.]
Image of page 4
FSW ECO-2013 McConnell V21 nikishin 5 ECO 2013 – Chapter 8 MODERN ECONOMIC GROWTH Modern economic growth is characterized by sustained and ongoing increases in living standards. Informal date of its start is the invention of steam engine in 1776, and the beginning of Industrial Revolution. Effects of introduction of steam engine included: Shift of manufacturing from manufacturing by hand to mass- production by engines in factories Shift of population from countryside to cities where factories became located Development of long-distance trade (when used in locomotives)
Image of page 5

Subscribe to view the full document.

FSW ECO-2013 McConnell V21 nikishin 6 ECO 2013 – Chapter 8 Effects of modern economic growth: Rapid and sustained increase in standard of living Reduction of time spent working and increase of time for leisure allowing ordinary people to participate in cultural and political life and to pursue educational goals Increased longevity. Average longevity in the Western World was 30 years before Industrial Revolution, today the world-wide average is 71 years. Increased longevity combined with increased leisure time leads to cultural, social, and political changes. [Note: increased longevity leads to problems related to aging population]
Image of page 6
FSW ECO-2013 McConnell V21 nikishin 7 ECO 2013 – Chapter 8 DISTRIBUTION OF MODERN ECONOMIC GROWTH Modern economic growth is distributed unevenly The main cause of the vast differences of the effect of modern economic growth on people's standard of living is the different starting date of modern economic growth in various parts of the world.
Image of page 7

Subscribe to view the full document.

Image of page 8
  • Fall '16
  • Randy Moffet

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes