ECON 295 Chapter Notes - Chapter 27: Real Interest Rate, Diminishing Returns, Financial Capital
17 Apr 2017
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Macroeconomics policy chapter 26: money and. Sustained increases in y* are a powerful method of raising material living standards than the removal of recessionary gap. Even small differences in annual growth rate can result in larger changes in living standards after many years. Benefits of economic growth: rising average living standards, change the whole society"s consumption patterns, more environmental protection, alleviation of poverty, not everyone benefits directly from growth, but redistribution is easier in a growing economy. The four fundamental sources of economic growth are: Growth in human capital (human capital being the set of skills workers acquire through formal education and on-the-job training) Using the equilibrium condition in the simplest short-run macro model we get o o. In the short-run macro model, real gdp adjusts to determine equilibrium, in which desired saving equals desired investment. In the model"s long-run version, real gdp is equal to y* and the interest rate adjusts to determine equilibrium.
