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Principles of Macroeconomics

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

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  1. Principles of Macroeconomics Chapter 17: Economic growth

  2. Economic growth • Measured by annual rate of change in: • real GDP • per capita real GDP

  3. Rule of 72 • Rule of 72: • Approximate # of years for a balance to double = 72 / growth rate for the variable

  4. 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

  5. Determinants of growth • changes in the quantity and quality of available resources • changes in technology

  6. Economic growth • Economic growth = growth rate of TFP + growth rate of resources

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