ECN 204 Chapter 7: Chapter 7 - Production & Growth
Document Summary
Fact 1: there are vast differences in living standards around the world. Fact 2: there is also great variation in growth rates across countries. Since growth rates vary, the country rankings can change over time: Poor countries are not necessarily doomed to poverty forever. Example: singapore, incomes were low in 1960 and are quite high now. Rich countries can"t take their status for granted: they may be overtaken by poorer but faster-growing countries. A country"s standard of living depends on its ability to produce goods and services. This ability depends on productivity, the average quantity of g&s produced from each hour of a worker"s time. Y = real gdp = quantity of output produced. When a nation"s workers are very productive, real gdp is large and incomes are high. When productivity grows rapidly, so do living standards. The stock of equipment and structures used to produce g&s is called [physical] capital, denoted k.
