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Unformatted text preview: Chapter 9 *Economic growth increases in per capita real GDP measured by its rate of change per year; a shift up and to the right on the production possibilities curve; benefits: reductions in illiteracy, poverty, illness and increases in life spans and political stability; costs: environmental pollution, alienation, and urban congestion; small changes in growth rates lead to large differences in real GDP over time *Factors of economics growth the rate of saving, the rate of growth of capital, and the rate of growth of labor productivity *Labor productivity total real domestic output (real GDP) divided by the number of workers (output per worker); has grown 3 times faster than the rate of growth of productivity in the rest of the economy since 1950. *Saving a higher rate of saving eventually mean higher living standards in the long run, all other things held constant *Paul Romer economist that believes that economic growth can continue as long as we keep coming up with new ideas *New growth theory a theory of economic growth that examines the factors that determine why technology, research, innovation, and the like are undertaken and how they interact; economists believe that technology...
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This note was uploaded on 04/07/2008 for the course ECON 103 taught by Professor Downing during the Fall '06 term at Danville Area CC.
- Fall '06