GROWTHCLASS

# GROWTHCLASS - Economic Growth GROWTH Interrupted but...

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1 1 Economic Growth b GROWTH b Interrupted but ongoing s 3.33% real GDP per year s 2% real per capita GDP per year (‘50- ’09) S GDP/Pop S Doubles about every 36 years – rule of 72 S Doubled since 1972 b Why? s productivity b Output per worker (manhour) Y/L b Y=Y/L*L b Y/POP=Y/L*L/POP b ( Antigrowth vid, malthus; growth animation) 2 In the News? Course Issues s Check gradebook, clickers s Thanksgiving in 3 weeks s Inv game rounds 2, 3 s Advisement – jobs, etc 3

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2 U.S Growth Rates? Measuringworth.com s Real GDP per year b 1790-2010 3.75% b 1900-2010 and 1946-2010 3.18% b 1946-2007 3.33% s Real GDP per capita b 1790-2010 1.71% b 1900-2010 1.87% 1946-2010 1.92% b 1946-2007 2.05% s Remember b real gdp 3.33% per capita 2% 4 5 Growth is Relatively New http://www.measuringworth.com/usgdp/ 6 Course Issues
3 7 How long for China to catch up to U.S. real GDP at current growth rates (starting 9% versus 2% per capita real gdp)? A. 4 years B. 20 years C. 40 years D. Never 8 Application -Growth Rates of Real Per Capita GDP b China in 2000 = U.S. in 1870 start 2000 % ch U.S. 1870 3,347 34,260 1.8 U.K. 1870 4,107 23,550 1.35 Japan 1890 1,256 26,460 2.8 China 1900 598 3,940 1.9 Pak 1900 616 1,960 1.16 b China catch-up 2% v 9% 2010 figures real, per capita gdp b (41,792)e ( n*.02 )=(2,807) e ( n*.09 ) -> 41,792/2,807 = e ( n*.(09-.02) ) b ->ln(41,792/2,807)= ln(e ( n*(.09-.02 ) )= ln(14.9)=n*.07=2.7/.07=38.57 years b US: 41,792e(38.57*.02)=90,387 (U.S. EDRS Intl Data, 2005 dollars) s Note China now, where U.S. was in 1860-70? BUT 9 If the long-run aggregate supply curve is vertical, how can we have economic growth? s

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## This note was uploaded on 02/05/2012 for the course 220 103 taught by Professor Sheflin during the Fall '09 term at Rutgers.

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GROWTHCLASS - Economic Growth GROWTH Interrupted but...

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