ECN 204 Lecture Notes - Annual Percentage Rate, Human Capital, Demand Factor

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20 Apr 2012
Department
Course
Chapter 6 (Pg. 120)
Economic Growth
Economists define and measure economic growth as either:
1. An increase in real GDP occurring over some time period.
2. An increase in real GDP per capita occurring over some time period.
The real GDP per person, found by dividing real GDP by a country’s
population
Growth as a Goal
Wide economic goal
Increase in output relative to population= increase in
wages/income/standard of living
Growth lessens the burden of scarcity
Arithmetic of Growth
Small percent changes matter when dealing with large sums
Rule of 70:
For example, 5% annual rates of growth will double real GDP in about 14
years (= 70/5)
Growth in Canada
Three reasons:
(1) Improved products and services
(2) Added Leisure
(3) Other Impacts: Environment
Modern Economic Growth (Pg. 122)
Modern Economic Growth is the historically recent phenomenon in which
nations have experience sustained increases in real GDP per capita
Modern economic growth has had effects on us:
(1) Culturally: for the first time in history ordinary people have significant time for
leisure activities and the arts
(2) Socially: has allowed for universal public education, elimination of ancient
social norms and legal restrictions against women and minorities doing certain
jobs or holding certain positions
(3) Politically: countries experiencing modern economic growth have tended to
move toward democracy
Uneven Distribution of growth: (pg. 123)
The timing of a country beginning its modern economic growth has to do a
lot with their current GDP per capita and living standards
Catching Up is possible (Pg. 123)
%Change in growth = [(2008 Real GDP 2007 Real GDP)/2007 GDP] x 100
Approximate number of years required to double real GDP
= ________70________
Annual percentage rate of growth
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