ECON 105 Lecture Notes - Lecture 8: Longrun

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Eldar Sehic

Document Summary

Real gdp growth rate (g) g = (ynew yold)/yold. General growth: yn = yn(1 + g)n n. Example: suppose n = 2013 and n = 2012. Y2013 = y2012 + y2013g (y2013 - y2012)/ y2012 = g. Example: suppose there are two economies (a and b) with the same starting gdp (yn), but economy a"s growth rate is 1% and economy b"s growth rate is 2%. A (1 + gb)n n = 2(1 + ga)n n (1. 02)n n = 2(1. 01)n n (1. 02)t = 2(1. 01)t. T = ln2/(ln1. 02 1. 01) 70 years. Asl growth rate = gdp growth rate pop. Investment, discovery, spill overs (knowledge and ideas from other countries) Increasing one of the inputs (l or hk or pk) only, while holding other inputs constant, increases y but in a diminishing manner. Increasing all of the inputs (l and hk and pk) by the same multiple, increases y by that same multiple.