MGEC81H3 Lecture Notes - Lecture 2: Overfishing, Capital Accumulation, Unconditional Convergence
19 Apr 2018
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Mgec81 (g. frazer) some potential questions after lectures 2 and 3: explain the difference between consumption goods and capital goods. Consumption goods: goods reduced for satisfying human wants and needs. Capital goods: goods produced in order to produce other commodities: explain the harrod-domar model of economic growth. State (but do not derive) the equation and/or diagram that explains the nature of growth in this model. Describe the effect of a temporary increase in savings under this model. Temporary increase in savings will result in permanent growth and get rid of poverty trap. This is because if the increased savings last long enough that the economy gets past the threshold b then drop back to the initial level, the economy will keep growing as g> n forever. B: explain the solow model of economic growth, using a diagram and/or algebra as relevant.
