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Principles of Macroeconomics. Chapter 17: Economic growth. Economic growth. Measured by annual rate of change in: real GDP per capita real GDP. Rule of 72. Rule of 72: Approximate # of years for a balance to double = 72 / growth rate for the variable. Economic growth and economic welfare.
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Principles of Macroeconomics Chapter 17: Economic growth
Economic growth • Measured by annual rate of change in: • real GDP • per capita real GDP
Rule of 72 • Rule of 72: • Approximate # of years for a balance to double = 72 / growth rate for the variable
Economic growth and economic welfare • Problems with using economic growth rate as a measure of social welfare: • income distribution • quality of life • leisure time • externalities
Determinants of growth • changes in the quantity and quality of available resources • changes in technology
Economic growth • Economic growth = growth rate of TFP + growth rate of resources