12.03.08 - ECONOMICS 1 Professor Kenneth Train 12/3/08...

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ECONOMICS 1 Professor Kenneth Train 12/3/08 Lecture 28 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. LECTURE Well, thanks for doing those evaluations. Believe it or not, I actually read them, so if you write comments it will help students next year. I want to ask you a question. I get many requests for people to make announcements, and I always turn them down. But then I’ve wondered, maybe you do want to hear them! Let’s vote; okay, the clear winner is to continue not having announcements. GROWTH Today we’re talking about growth. It draws together topics from macro- and microeconomics. All the stuff we’ve talked about so far is small potatoes as far as well being from the growth in our economy. Here’s a graph I showed last semester about GDP from the last century to now—it’s gone up! That’s amazing. I was born in 1951, about here. The economy has increased by a factor of six since then. Growth is where most of our well-being comes from. Everything else is still relevant, because that creates the environment in which growth can occur. All the stuff we have talked about comes to play in creating growth. Another note is that we are in a recession; but if you put that on the end of the graph there, it’s just a straight line. So these are hard times, but in the global view of things it’s real quite mild. So where does growth come from? 1. Larger Labor Supply Our country is founded on immigrants and is strengthened by having an immigration flow coming in. The concept that immigration is bad for the economy is actually just horribly short-sighted. Immigration generally helps us have a larger labor supply which makes more input, more output, and a bigger economy. 2. More capital This means that we can produce more: 3. Increased productivity How do we induce growth? Just looking at those concepts a few things become clear. What induces growth? - Better education for more people - Stimulate investment - Increase research and development - Induce people to save more Education for more people is how you get more capital. We’ve talked about this as a public good. It creates growth, and from a macroeconomic view,
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ECONOMICS 1 ASUC Lecture Notes Online: Approved by the UC Board of Regents 12/3/08 D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. 2
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This note was uploaded on 07/25/2011 for the course ECON 1 taught by Professor Martholney during the Fall '08 term at University of California, Berkeley.

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12.03.08 - ECONOMICS 1 Professor Kenneth Train 12/3/08...

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