gs_-04_--_Growth_and_PPF_--_

gs_-04_--_Growth_and_PPF_--_ - ANNOUNCEMENT THE UVLE...

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1 ANNOUNCEMENT THE UVLE ALREADY HAS THE FOUR LECTURES INCLUDING THIS ONE UPLOADED IN IT. ONLY 38 MEMBERS OF THE CLASS HAVE ACCESSED IT SO FAR. ONCE IN UVLE , GO TO \SCHOOL OF ECONOMICS\SECOND SEMESTER\ \ECONOMICS 11. Nov. 20, 2009 Econ. 11-Lecture #4 2 LECTURE #4: ECONOMIC GROWTH; INTRODUCTION TO THREE FUNDAMENTAL ECONOMIC LAWS ± PRODUCTION POSSIBILITY FRONTIER ± SOME PRINCIPLES OF ECONOMIC GROWTH ± INTRODUCTION: THREE FUNDAMENTAL LAWS OF ECONOMICS GROWTH OF PPF OVER TIME (#1) ± A country’s production possibility frontier can expand (or grow) over time. ± This means either improving technology and growth in the resources used in production. GROWTH OF PPF OVER TIME THEREFORE MEANS EXPANSION OF PRODUCTIVE CAPACITY BUT SUPPOSE THE PPF SHIFTS INWARD ? (#2) ± It means the PPF – or productive capacity – declines . ± This could arise from: o Decline of resources (labor and capital, etc.) or inputs – arising from reduction of some events … BUT SUPPOSE THE PPF SHIFTS INWARD? (#2) ± Decline of inputs…can be due to o Natural disasters o Wars o Reduction of investments… o Reduction of labor through migration… o Loss of land territory
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2 GROWTH OF PPF OVER TIME: EXAMPLES (#3) ± Example #1: Balanced growth ± Example #2: Unbalanced growth ± Example #3: Effects of thrift and investment on growth Nov. 20, 2009 Econ. 11-Lecture #4 8 A COUNTRY’S PRODUCTION POSSIBILITY FRONTIER, 2009 and 2029 c 09 INDUSTRY 0 AGRICULTURE 2009 INDUSTRY AGRICULTURE 2029– 20 years later c 29 Nov. 20, 2009 Econ. 11-Lecture #4 9 A COUNTRY’S PRODUCTION POSSIBILITY FRONTIER, 2009 and 2029 c 09 INDUSTRY 0 AGRICULTURE 2009 INDUSTRY AGRICULTURE 2029 – 20 years later c 29 Nov. 20, 2009 Econ. 11-Lecture #4 10 c 09 c 29 0 I N D U S T R Y AGRICULTURE 2029 2009 EXAMPLE #1 : BALANCED GROWTH 0 AGRICULTURE 2029 2009 EXAMPLE #1 : BALANCED GROWTH c 09 c 29 Industry and Agriculture grow in the same proportion.
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gs_-04_--_Growth_and_PPF_--_ - ANNOUNCEMENT THE UVLE...

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