POSC 182 Lecture 2 2010

POSC 182 Lecture 2 2010 - POSC 182: Politics and Economic...

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POSC 182: Politics and Economic Policy Lecture 2: Efficiency vs. Equality Prof. Yuhki Tajima January 6, 2010
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The Importance of Growth Economic growth is an increase in the Gross Domestic Product (GDP), or total goods and services, of an economy. GDP is also considered the total income of a country Why does growth matter? If the economy is growing, there are more goods and services that are produced for the population, which can potentially make people better off.
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Concept: Economic Efficiency Country A is more efficient than Country B if Country A can produce more goods and services than Country B with the same amount of factors of production (Capital and Labor) Efficiency is about mixing capital and labor in the most productive manner with a given level of technology. Increasing economic efficiency leads to economic growth How then can an economy achieve efficiency?
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The First Fundamental Theorem of Welfare Economics Competitive markets tend toward efficient allocation of resources But: Competitive markets do not guarantee that the distribution of resources is the most socially desirable or equitable.
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This note was uploaded on 10/05/2010 for the course POSC 182 taught by Professor Schuelenberg during the Spring '08 term at UC Riverside.

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POSC 182 Lecture 2 2010 - POSC 182: Politics and Economic...

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