Chapter%209%20PPT%20Student%20(2%20slides%20per%20page)[1]

Chapter%209%20PPT%20Student%20(2%20slides%20per%20page)[1]...

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8/25/2010 1 Chapter 9 Economic Growth the Economic Growth, the Financial System, and Business Cycles Learning Objective 9.1 Long-run economic growth The process by which rising productivity increases the average standard of living. The Growth in Real GDP per Capita, 1900–2008
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8/25/2010 2 Learning Objective 9.1 The Connection between Economic Prosperity and Health Another Benefit of Long-run Economic Growth
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8/25/2010 3 ± The growth rate of Real GDP per capita is the best indicator of advances in the ± One way to judge how rapidly a variable is growing is to see how quickly it will double in size. ± An approximation of the # of years to double is the Rule of 70 . ± e.g. Growth rate = 2%. How many years to double? ± e g Growth rate = 5% How many years to double? e.g. Growth rate = 5%. How many years to double? ± Note that growth rates compound over time, so that small changes in growth rates have large effects in the long run. What determines the Long-Run Growth Rate? Labor productivity The quantity of goods and services that can be produced by one worker or by one hour of work. Increases in labor productivity are the key to Why is our standard of living in the U.S. nearly 8 times as high now as it was in 1900? What causes increases in labor productivity?
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8/25/2010 4 Learning Objective 9.1 Potential Real GDP : The level of GDP attained when all firms are producing at capacity. ± When someone starts a new business they typically need to purchase large amounts of capital. Existing firms often incur significant capital purchases as well. Where do these firms get the money to finance this
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This note was uploaded on 11/15/2010 for the course ECON 203 taught by Professor Nelson during the Fall '08 term at Texas A&M.

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Chapter%209%20PPT%20Student%20(2%20slides%20per%20page)[1]...

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