ECN 204 Chapter Notes - Chapter 8: Annual Percentage Rate, Allocative Efficiency, Productive Efficiency

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25 Jul 2016
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1. ECN204 – Chapter 8 – Economic Growth
Economic Growth
Economic growth can be measured as (1) an increase in real GDP occurring over some time
period and (2) an increase in real GDP per capita occurring over some time period
Rule of 70 – method that determines number of years for measure to double
Economists measure economic growth as either (1) an increase in Real GDP over time or (2)
an increase in Real GDP per capita over time
Growing economy lets government undertake new programs to alleviate poverty, embrace
diversity, cultivate the arts and protect the environment without impairing scarcity levels
Modern Economic Growth
Modern economic growth is characterized by sustained ongoing increases in living
standards that can cause dramatic increases in the standard of living within a generation
Growth is effected by cultural, social, and political arrangements
Cultural – increases wealth and living standards, allowing for more leisure time
Social – increases public education and encourages diversity
Political Arrangements – a move towards democracy
There are leader countries and follower countries that have differing levels of technology
Factors that promote growth include strong property rights, patents/copyrights, efficient
financial institutions, literacy/education, free trade, and competitive market system
Institutes that Promote Modern Economic Growth
Strong property rights –protects private property and tyrannical governments
Patents and copyrights – creates strong financial incentive to invent and create
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