550PART NINETHE REAL ECONOMY IN THE LONG RUN◆Economic prosperity, as measured by GDP per person,varies substantially around the world. The averageincome in the world’s richest countries is more than tentimes that in the world’s poorest countries. Becausegrowth rates of real GDP also vary substantially, therelative positions of countries can change dramaticallyover time.◆The standard of living in an economy depends on theeconomy’s ability to produce goods and services.Productivity, in turn, depends on the amounts ofphysical capital, human capital, natural resources, andtechnological knowledge available to workers.◆Government policies can influence the economy’sgrowth rate in many ways: encouraging saving andinvestment, encouraging investment from abroad,fostering education, maintaining property rights andpolitical stability, allowing free trade, controllingpopulation growth, and promoting the research anddevelopment of new technologies.
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Capital accumulation, Technological Knowledge, GDP measure