Chapter 15 summary and lecture notes

, Economic Growth

Y An increase in real app ,
occurring over some time period
app value of final goods & services produced within the borders of the
country
>
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=




>
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real= prices kept constant over time


2, An increase in real app per capita occurring over some time period
>
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app capita indicates the aug share of each
per .
citizen in the GDP

> This
def takes into account size of population
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.




>
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Real GDP/capita real app/size of the population
=




GDP is calculated as
percentage rate of growth per quarter (3-month period) or per
a


year. The resulting number is compared in percentage terms with that of the previous
period.

Growth as a Goal
X expansion of total output relative population results in rising real wages income
thus higher standards of living
Growth lessens the burden of
scarcity
↓ A
growing economy ,
unlike a static
economy ,
can cause more today while
increasing
its capacity to produce more in the future.
of scarary /relaxing Society's
By easing the burden constraints
>
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on


productions economic nation attain its economic
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, growth enables a to
goals
more readily undertake new endeavors requiring the use of
goods
services to be accomplished.


Arithmetic of Growth
- small
changes in the rate of economic growth matter

> Rule 70 : a method for determining the no of
years
it will take for some measure to double
-




given its annual percentage increase ,
by dividing To
by the annual percentage increase.
approximate no of years required to double real app 20nualy rate
=
>
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of growth

(1%)
2g) A 3 % annual
growth rate will double real app in about 23
years
Growth of 8 % per year will double real app in abouta
years (1%)