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AP Economics

AP Economics. Mr. Bernstein Module 39: Growth Policy: Why Economic Growth Rates Differ April 8, 2014. AP Economics Mr. Bernstein. Growth Policy: Why Economic Growth Rates Differ Objectives - Understand each of the following:

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AP Economics

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  1. AP Economics Mr. Bernstein Module 39: Growth Policy: Why Economic Growth Rates Differ April 8, 2014

  2. AP EconomicsMr. Bernstein Growth Policy: Why Economic Growth Rates Differ Objectives - Understand each of the following: • The factors that explain why long-run growth rates differ so much among countries • The challenges of growth posed by scarcity of natural resources, environmental degradation, and efforts to make growth sustainable

  3. AP EconomicsMr. Bernstein Why Growth Rates Differ • The power of compounding means small differences in growth rates matter • $10,000 savings earning 3% over 30 years = $10,000*1.0330 = $24,273 • $10,000 savings earning 2.5% over 30 years = $10,000*1.02530 = $20,976 • 14% difference over time • Why do Growth Rates Differ? • Physical Capital, Human Capital and Technology

  4. AP EconomicsMr. Bernstein Why Growth Rates Differ • Government can promote – or block – all three sources of productivity • Physical Capital: Build infrastructure (roads, power grid,etc.); provide incentive for firms to invest in capital • Human Capital: Public or subsidized education • Technology: Grants and subsidies for research • Political Stability and Confidence-Building

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