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EC140 (329)
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Department
Economics
Course
EC140
Professor
Mindi Foster
Semester
Summer

Description
Long-run determinants of the level and growth of real GDP 1. examine international data on real GDP per person 2. examine the role of productivity – the amount of g&s produced for each hour of a worker’s time 3. consider the link between productivity and the economic policies that a nation pursues Economic Growth around the World  The growth rate of % per year ignores short-run fluctuations around the long-run trend  The world’s richest countries have no guarantee they will stay the richest and the world’s poorest countries are not doomed forever to remain in poverty. Productivity: Its Role and Determinants  Why productivity is so important? o ex. Robinson – he gets to consumes only what he produces, his living standard to tied to his productivity o Productivity is the key determinant of living standards and that growth in productivity is the key determinant of growth in living standards o GDP measures 2 things at once  the total income earned by everyone in the economy  the total expenditure on the economy’s output of g&s  income=output  How Productivity is determined? o Physical capital – the stock of equipment and structures that are used to produce goods and services  i.e. woodworkers make furniture, they use saws, lathes, drill presses, more tools allow work to be more quickly and more accurately  Factor of production – the inputs used to produce goods and services(labour, capital …)  Capital is an input into the production process that in the past was an output from the production process  woodworkers use a lathe to make the leg of a table, earlier the lathe itself was the output of a firm that manufactures laths. The lathe manufacturer in turn used other equipment to make its product.  Capital is a factor of production used to produce all kinds of goods and services, including more capital o Human capital per Worker – the knowledge and skills that workers acquire through education, training, and experience  ex. the skills accumulated in early childhood programs, grade school, high school, college or univ., and on-the-job training for adults in the labor force  producing human capital requires inputs in the form of teachers, libraries, and student time  Student – workers who have the important job of producing the human capital that will be used in future production o Natural resources  land, rivers, m
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