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Economic Growth

Economic Growth. US Growth over time. Growth. 1994-2004 saw a 38% growth in real GDP As populations grow GDP must also Real GDP per capita- real GDP divided by total population. (per capita=per person). This can help determine standard of living and comparing nations.

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Economic Growth

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  1. Economic Growth US Growth over time

  2. Growth • 1994-2004 saw a 38% growth in real GDP • As populations grow GDP must also • Real GDP per capita- real GDP divided by total population. (per capita=per person). • This can help determine standard of living and comparing nations. • Standard of living and quality of life • Consistent rise in Real GDP should improve them

  3. Capital deepening • Process of increasing the amount of capital per worker- • Physical capital=equipment for production • Human capital=training and education for workers • Increase in output and worker’s wages • Growth will occur in economy. More workers= more productivity=more good=more money

  4. Savings and InvestmentCapital Deepening • Savings-income not used for consumption • Savings rate- proportion of disposable income that is saved. • Complete figure 12.14 on page 321 • Savings in retirement, banks, ultimately investments • Banks and mutual funds make $$$$$ available to firms for capital deepening

  5. Other examples Population impact *India- large population but little capital deepening *China- large population and increasing capital deepening Government effects- taxing = less investment Trade deficit can also hurt investment in economy

  6. Technology • Advance in technology will help with growth • Technological progress- increasing efficiency by producing more without using more input • Computers, robotics, new methods, etc,, • 4 causes • 1. Research 2. innovations • 3. Scale of market 4. Education & Experience • 5. Natural resources

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