ECON 105 Lecture Notes - Lecture 8: Opportunity Cost, Loanable Funds, Real Interest Rate

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Seong- Jun Choi

Document Summary

Objective: the four fundamental determinants of growth in real gdp. The main element of neoclassical growth theory: the nature of economic growth. Many do not share incomes directly in the growth, but. ___________________ of income is politically easier in a growing economy, but not in a static economy. Economic growth is often encouraged by increasing investment and. _______________: this requires less consumption today the opportunity cost of growth. Growth usually involves the replacement of some firms and workers: this process involves real ____________________ costs. The four fundamental sources of long run economic growth are: Technological improvements: theories of long-run economic growth. We focus on the long run when actual gdp __________ potential output. We hold y* constant and let the real interest rate be determined endogenously by national savings and desired investment. The investment increases the ________________ (if greater than depreciation) that results in higher future level of potential output (y*).