Principles of Economics- Mankiw (5th) 513

Principles of Economics- Mankiw (5th) 513 - CHAPTER 24...

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CHAPTER 24 PRODUCTION AND GROWTH 531 decades. The typical citizen of China in 1997 had about as much real income as the typical American in 1870. The typical person in Pakistan in 1997 had about one- half the real income of a typical American a century ago. The last column of the table shows each country’s growth rate. The growth rate measures how rapidly real GDP per person grew in the typical year. In the United States, for example, real GDP per person was $3,188 in 1870 and $28,740 in 1997. The growth rate was 1.75 percent per year. This means that if real GDP per person, beginning at $3,188, were to increase by 1.75 percent for each of 127 years, it would end up at $28,740. Of course, real GDP per person did not actually rise exactly 1.75 percent every year: Some years it rose by more and other years by less. The growth rate of 1.75 percent per year ignores short-run fluctuations around the long-run trend and represents an average rate of growth for real GDP per person over many years. The countries in Table 24-1 are ordered by their growth rate from the most to
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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