ECO 1102 Lecture Notes - Lecture 9: Nominal Interest Rate, Real Interest Rate, Market Basket

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: Gordon Lenjosek

Document Summary

Before 1800, economic growth was just fast enough to keep up with the very slow population growth. There was little change in real gdp per capita (purchasing power) Gdp and population began to grow during the industrial revolution. Early europe: after 1800, particularly in europe, during the 1800s, economic activity increases substantially, during the 1900s, gdp grew faster than the population, raising the standard of living for many. Growth rate formula for real gdp per capita (from last class) Economic growth builds on itself over time, the base grows yearly. The process is the same as interest compounding in a savings account. A small annual growth rate can result in a large change in an economy over time so the total change is much bigger than the annual growth rate suggests. Canadian annual average growth in real gdp per capita was about 1. 8% over the past 146 years and is revolutionary for this time period.