ECON 209 Lecture Notes - Lecture 6: Root Mean Square, Byrsonima Crassifolia, Human Capital
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26. 1 the nature of economic growth: sustained increases in y* are a more powerful method of raising material living standards than the removal of recessionary gaps. Bene ts of economic growth: raising average living standards, more environmental protection - not necessarily, and very counter intuitive, alleviation of poverty - but not everyone bene ts directly from growth. Sources of economic growth: the four fundamental sources of economic growth are, growth in the labour force, growth in human capital (productivity, growth in physical capital. 26. 2 established theories of economic growth: using the equilibrium condition in the simplest short-run macro model we get: Price" that equilibrates this market: rms investment is negatively related to the interest rate, national saving is positively related to the interest rate. Now we add a government sector to our model: Private saving = y - t - c. High future growth rate of potential output.