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Canada (162,165)
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ECN 204 (282)
Chapter 6

chapter 6 macro

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ECN 204
Tom Barbiero

Economic growth chapter 6 macronecon Economic growthEconomic growth is shown and measured as an increase in real GDP over an interval of time or it can be shown and measured as an increase in real GDP per capita during a certain period of timeRegardless of how it is shown and measured economic growth is determined as a percentage rate of growth every three monthsThe percent change in growth is calculated by the formulanew real gdpold real gdpold real gdp100The second definition takes into account the number of people that are within a country The real GDP is found by dividing the real gdp by the amount of people in the country it shows the amount of real GDP per personwe take the result and compare that with previous periods of timeTo compare the living standards between countries the real GDP per capita is a better approach of doing soOccasionally real gdp can be misguiding Growth as a goalGrowth is an important economic goal to accomplish as growth reduces the impact scarcity has on society where if we increase the output per person this will increase their income thus lead to a better standard of living With more income they will be able to meet more of their needs without having to let go of what they are consuming now Furthermore an economy that achieves growth is able to meet peoples wants and resolve socioeconomic problems Arithmetic of growthThe rule of 70 is a way to determine the amount of time needed for a measure to double based on the annual percentage increase by dividing that percentage increase into 70Approx number of years needed to double measure70 annual percentage rate of growth Growth in CanadaWe qualify the GDP in several ways i Improved products and servicesbecause updates to products and services are not taken into consideration this causes the growth of economic well being to appear lower than it should have been ii Addedleisure increases in real GDP and per capita GDP is accomplished regardless of the large amount of leisure time available The raw growth number understate the growth in economic well being iii Other impacts measures of growth do not take include any effects growth had on the environment and the quality of life If growth makes the physical work environment inferior and causes the work environment to be stressful the growth numbers will overstate the gain in well being that occurs as a result of growth IF growth leads to stronger environmental protections or a more secure and stress free lifestyle the umber will understate the gain in wellbeing iv Canadian growth rates are not stable or smooth over time sustained growth is not an event that all countries get to experience unless output per person increases Modern economic growthModern economic growth is the historically recent phenomenon where nations are able to experience an increase for a period of time in real GDP per capitaThe industrial revolution led to sustained increases to the standard of living and economic growth The biggest change that ever occurred was change itself where in early times material standards of living and the variety of goods and services people had access to ages ago changed marginally but those who inhabit countries who are experiencing economic growth are exposed to new technologies products and servicesEconomic growth affected cultural social and political arrangementsEconomic growths effect on cultural arrangements is that the increase in wealth and living standards allow ordinary people to have more time for leisure activities and the artsSocially those who are experiencing economic growth have places foruniversity education and got rid of ancient social norms and legal restrictions that discriminated against women and minorities doing certain jobs or holding certain positionsPolitically when economic growth is achieved companies tend towards a more democratic style of leadershipThe benefits associated with economic growth has caused economics to discover ways to achieve it and retain it their desire is amplified by the fact that economic growth is not evenly scattered around the world The uneven distribution of growthThe gaps between the per capita gDP Is due to the difference in the time when these countries started experiencing modern economic growth the earlier these countries achieved modern economic growth the high the average standardof living Catching up is possibleCountries that have recently achieved economic growth is not destined to be a poor country because it is less time consuming and costly to adapt to these new technologies rather than using resources to make them Because rich countries already have the most advanced technologies it becomes more time consuming and costly to invent new technologies therefore reducing their GDP growth rate to a low percentagefollower countries are rapidly increasing their standard of living because they can learn how to use current technology rather than invent it and they are capable of growing
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