ECO-2013 Lecture Notes - Lecture 4: Deadweight Loss, Creative Destruction, General Agreement On Tariffs And Trade
Document Summary
1) output growth means more goods and services per person. 2) output growth leads to income growth. 3) people will make better decisions than it faced with highly variable changes. Possible impact of just slightly reducing our long-run growth rate. Grow at annual rate: 3% national income will double every 23 years. If we only grow: 2. 5% income will double every 28 years. Only grow: 3. 5% income will double every 20 years. Each country should make the good/service for which they have. A tradeoff exists between consumption and investment. Those countries who reduce consumption to increase investment. Rules of the game or the policies and regulations that govern behavior. Institutions can be both the official laws and societal norms. The government"s policies and involvement in the economy are important, but too much government intervention can harm growth. The more free the economy is, the higher the growth rate will be. The country is more free, we will achieve:
