Macroeconomics
Chapter 6: Economic Growth and Productivity Overview
This chapter explores the multifaceted concept of economic growth, examining its dynamics in both the short run (focusing on resource utilization) and the long run(driven by factors like productivity). It also analyzes the potential advantages of sustained economic growth, including improved living standards. Akeymetricformeasuringstandardsofliving isrealGDPpercapita.Thechapterdelvesinto the method for calculating it and its limitations.
Productivity, the effciency with which resources are transformed into goods and services, emerges as a cornerstone of long-run economic growth. The chapter explores diverse factors that can increase productivity, including technological advancements, human capital investment, and infrastructure development. The chapter also introduces the aggregate production function, a framework for understanding the relationship between inputs (capital,labor)andoutputs(GDP).Thisframeworklaysthefoundationfor analyzing the impact of various economic growth policies. Learning Objectives ● Defne economic growth in the short and long run and determine its advantages. ● Defne and calculate real GDP as an indicator of the standards of living. ● Understand productivity as a cornerstone of economic growth and identify factors that increase it. ● Analyze the aggregate production function. ● Identify policies that promote economic growth. A. Economic Growth and Real GDP per Capita Economic growth is a key indicator of macroeconomic performance. It reflects an increase in a country’soutput ,health,andprogress.Butforpeopletoenjoymoregoodsandservices,outputhasto increase by more than any increase in population. This is why economic growth is defned as a sustained increase in real GDP per capita over time . By the end of this chapter, you should be able to:
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