CH9 - Learning Objective 9.1 Long-run economic growth The...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
9/30/2009 1 Economic Growth, the Financial System, and Business Cycles 1 Learning Objective 9.1 Long-run economic growth The process by which rising productivity increases the average standard of living. FIGURE 9.1 The Growth in Real GDP per Capita, 1900–2006 Learning Objective 9.1 The Connection between Economic Prosperity and Health Making the Connection Learning Objective 9.1 The growth rate of real GDP (or real GDP per capita) during a particular year is equal to the percentage change from the previous year. % 100 1 1 , t t t t y y g t y For longer periods of time, we can use the average annual growth rate. ) ... ( 1 1 , n t t t n t t g g g n g 4 Learning Objective 9.1 One way to judge how rapidly a variable is growing is to see how quickly it will double in size. An approximation of the number of years to double is the Rule of 70. rate Growth 70 double to years of Number Note that growth rates compound over time, so that small changes in growth rates have large effects in the long run. What Determines the Rate of Long-Run Growth? Increases in real GDP per capita depends on increases in labor productivity Labor productivity The quantity of goods and services that can be produced by one worker or by Learning Objective 9.1 services that can be produced by one worker or by one hour of work. What causes increases in labor productivity? 6
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
9/30/2009 2 Learning Objective 9.1 What causes increases in labor productivity? Capital Manufactured goods that are used to produce other goods and services. Increases in Capital per Hour Worked Technological Change Economic growth depends more on technological change than on increases in capital per hour worked. Technological change is an increase in the quantity of output firms can produce using a given quantity of inputs. Solved Problem 9-1 The Role of Technological Change in Growth Learning Objective 9.1 Between 1960 and 1995, real GDP per capita in Singapore grew at an average annual rate of 6.2 percent. This very rapid growth rate results in the level of real GDP per capita doubling about every 11.5 years. In 1995 Alywn Young of the University of Chicago published an
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/22/2010 for the course FBE ECON1002 taught by Professor Rao during the Spring '10 term at HKU.

Page1 / 6

CH9 - Learning Objective 9.1 Long-run economic growth The...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online