Economic Growth

Economic Growth - ECONOMIC GROWTH AND DEVELOPMENT The term...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECONOMIC GROWTH AND DEVELOPMENT The term economic growth refers to either real economic growth or to per-capita real economic growth. Real Economic Growth An increase from one period to the next in real GNP. Per-Capita Real Economic Growth An increase from one period to the next in per-capita real GNP, which is real GNP divided by population. Most economist think the per-capita measurement is more useful, since it, unlike absolute economic growth, tell us how much better or worse off the average person is in one period compared with another, assuming a given income distribution. E.g. India has a higher real GNP than Norway. But it also has 171 times the population. It turns out that per-capita real GNP in Norway is approximately 50 times as high as per-capita real GNP in India. Growth in a Production Possibilities Frontier Framework The distance between the two PPF, represents the increased productive capabilities that can, but may not, be realized by the economy. If the economy actually realizes these increased capabilities, then growth has occurred between 1991 and 1996. If it does not, then growth has not been realized. The latter case would be analogous to discovering a new field of oil or inventing a new technology and doing nothing about it. What Factors Affect Growth?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/28/2011 for the course ECON 1 taught by Professor Sm during the Spring '10 term at Laney College.

Page1 / 2

Economic Growth - ECONOMIC GROWTH AND DEVELOPMENT The term...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online