006 Ch7 class notes

006 Ch7 class notes - 10/27/2010 Chapter 7 Economic Growth...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
10/27/2010 1 slide 0 Chapter 7 CHAPTER 7 Economic Growth I Economic Growth I: Capital Accumulation and Population Growth slide 1 What we have done so far? Ch 9: Short run fluctuations. Quantity Theory, AD –AS Model (fixed prices, closed economy) Ch 3: Long run determination of constant output and income distribution (fixed supply of labor and capital, constant technology, flexible prices, zero growth in the long run). Market for loanable funds. (closed economy) Ch 4: Long run determination of prices and interest rate Quantity Theory and Fisher Equation (constant output and flexible prices) (closed economy) Ch 10 : Short run fluctuations: IS-LM Model (Keynesian Cross Model, theory of liquidity Preferences) (closed economy) Ch 11: Short run and long run determination of output and prices. IS-LM and AD-AS Model (fixed prices in the short run, flexible prices and constant output in the long run) (closed economy) CHAPTER 7 Economic Growth I slide 2 CHAPTER 7 Economic Growth I The menu for this chapter Closed economy (same as in Chapter 3) Long run (flexible prices) (same as in Chapter 3) Supply of labor and capital is not constant Technology is constant (same as in Chapter 3) Output is not constant in the long run (Output is growing, so thus consumption and private saving) Cobb douglas production function (same as in Chapter 3)
Background image of page 1

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

View Full DocumentRight Arrow Icon
10/27/2010 2 slide 3 3 A Look at U.S. Real GDP 1970Q1 2009Q3 Black line - trend in real GDP over time (left axis) Red line - trend in real GDP growth (percentage change in real GDP) over time (right axis) (growth measured year over year) Shaded areas represent “official” recession dates (as calculated by National Bureau of Economic Research) slide 4 Recall: Cobb Douglas Production Function Say Y = A K .3 L .7 %ΔY = %ΔA + .3%ΔK + .7%ΔL Output, in a country grows from : Growth in TFP (Total factor productivity = Y/F(K,L)) (entrepreneurial ability, education, roads, technology, etc.) Growth in Capital (machines, equipment, plants) Growth in Hours (workforce, population, labor participation, etc). slide 5 Which country has better standard of living? Real GDP (Y) in Starvania: $300 billion Comfortia: $ 8 trillion OR :average Real GDP growth rate (% change in Y) in Starvania: 10% Comfortia: 10%
Background image of page 2
10/27/2010 3 slide 6 Maybe, we care about growth in Y/L (per capita output).
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/29/2011 for the course ECON 101 taught by Professor Medison during the Spring '11 term at MedU Ohio.

Page1 / 12

006 Ch7 class notes - 10/27/2010 Chapter 7 Economic Growth...

This preview shows document pages 1 - 4. Sign up to view the full document.

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