Economics – Lecture #4
The expansion of production possibilities—and increase in the standard of living—is
called economic growth.
Two key factors influence economic growth:
Technological change is the development of new goods and of better ways of producing
goods and services.
Capital accumulation is the growth of capital resources, which includes human capital.
The Cost of Economic Growth
To use resources in research and development and to produce new capital, we must
decrease our production of consumption goods and services.
So economic growth is not free.
The opportunity cost of economic growth is less current consumption.
Gains From Trade
Comparative Advantage and Absolute Advanta