Lecture 13 Economic Growth

Lecture 13 Economic Growth - 1) Increases in Capital per...

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Measuring Economic Growth Growth in Real GDP: Growth in GDP per Capita: The Rule of 70: Real GDP CurrentYear RealGDP Last Year Real GDP LastYear Real GDP perCapita CurrentYear Real GDP perCapita Last Year Real GDP perCapita LastYear Real GDP perCapita Year X = Real GDP Year X Population Year X
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Potential GDP Potential GDP is real GDP when: 1) Labor employed is at the full-employment level. 2) Producers are operating at full-capacity. Potential real GDP increases each year as the labor force, capital stock grow and technological change occurs.
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What Determines the Rate of Long-Run Growth?
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Unformatted text preview: 1) Increases in Capital per Hour Worked Capital: Manufactured goods that are used to produce other goods and services. 2) Labor Productivity: The quantity of goods and services that can be produced by one worker or by one hour of work. 3) Technological Change: Increase in the quantity of output firms can produce using a given quantity of inputs. Assuming a Cobb-Douglass production function: GDP Growth Illustrated: Increase in the Capital Stock GDP Growth Illustrated: Technological Progress...
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Lecture 13 Economic Growth - 1) Increases in Capital per...

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