Econ growth

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Econ growth

  1. 1. 17 - 1Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowECONOMICGROWTH ANDTHE NEWECONOMY17C H A P T E R
  2. 2. 17 - 2Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShow•Increases in the Quantity &Quality of Natural Resources•Increases in the Quantity &Quality of Human Resources•Increases in the Supply (orStock) of Capital Goods•Improvements in TechnologyGROWTH ECONOMICSSupply Factors
  3. 3. 17 - 3Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShow•Households, Businesses, andGovernment Must Purchase theEconomy’s Expanded OutputGROWTH ECONOMICSDemand FactorEfficiency Factor•The Economy Must AchieveEconomic Efficiency as well asFull-Employment
  4. 4. 17 - 4Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowPRODUCTION POSSIBILITIES ANALYSISEconomicGrowthABCDabCapitalGoodsConsumer Goods
  5. 5. 17 - 5Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowPRODUCTION POSSIBILITIES ANALYSISGrowth and ProductionPossibilitiesLabor and ProductivityWorker-HoursLabor-Force ParticipationRateLabor ProductivityReal GDP =WorkerHoursXLaborProductivity
  6. 6. 17 - 6Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShow•Size ofemployed laborforce•Average hoursof work•Technologicaladvance•Quantity of capital•Education andtraining•Allocative efficiency•OtherREALGDPSUPPLY DETERMINANTSOF REAL OUTPUTLaborInputs(Hoursof Work)LaborProductivity(AverageOutputPer Hour)X =
  7. 7. 17 - 7Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowGROWTH IN THE AD-AS MODELProduction Possibilities andAggregate SupplyExtending the AD-ASModel
  8. 8. 17 - 8Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowGROWTH IN THE AD-AS MODELABCDCapitalGoodsConsumer GoodsPriceLevelReal GDPASLR1 ASLR2Q1 Q2
  9. 9. 17 - 9Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowECONOMIC GROWTH IN THEEXTENDED AD – AS MODELPriceLevelReal GDPoP1AS2ASLR1AD2Q1ASLR2Q2AD1AS1P2
  10. 10. 17 - 10Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowU.S. Economic Growth,Annual Averages for Five Decades1950-1959 1960-1969 1970-1979 1980-1989 1990-1999U.S. ECONOMIC GROWTH RATES543210Real GDP Real GDP Per CapitaAverageAnnualIncrease(Percent)
  11. 11. 17 - 11Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowACCOUNTING FOR GROWTHInputs versus ProductivityQuantity of LaborTechnological AdvanceQuantity of CapitalInfrastructureEducation and TrainingHuman Capital
  12. 12. 17 - 12Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowACCOUNTING FOR GROWTHIncrease in quantity of labor 33%Increase in labor productivity 67%Technological advance 26%Quantity of capital 18%Education and training 11%Economies of scale 6%Improved resourceallocation 6%100%Sources of Growth of U.S. Output, 1929-2000
  13. 13. 17 - 13Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowChanges in the Educational Attainmentof the U.S. Adult Population1950 1960 1970 1980 1990 2000100806040200College Graduates or More High School Graduates or MoreACCOUNTING FOR GROWTHSource: U.S. Census BureauPercentofU.S.Population
  14. 14. 17 - 14Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowACCOUNTING FOR GROWTHEconomies of ScaleImproved ResourceAllocationOther Factors
  15. 15. 17 - 15Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowPRODUCTIVITY GROWTHAND THE NEW ECONOMYCharacteristics of the NewEconomy•Microchip andInformation Technology•New Firms andIncreasing Returns•Start-Up Firms
  16. 16. 17 - 16Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowPRODUCTIVITY GROWTHAND THE NEW ECONOMYSources of Increasing Returns• More Specialized Inputs• Spreading of DevelopmentCosts• Simultaneous Consumption• Network Effects• Learning by DoingGlobal Competition
  17. 17. 17 - 17Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowPRODUCTIVITY GROWTHAND THE NEW ECONOMYMacroeconomic Implications• Faster NoninflationaryGrowth• Low Natural Rate ofUnemployment• Growing Tax RevenuesSkepticism About the NewEconomy
  18. 18. 17 - 18Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowGLOBAL PERSPECTIVEGrowth Competitiveness Ranking 2000Source: World Economic Forum12345678910United StatesSingaporeLuxembourgNetherlandsIrelandFinlandCanadaHong Kong, ChinaUnited KingdomSwitzerlandRank
  19. 19. 17 - 19Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowIS GROWTH DESIRABLEAND SUSTAINABLE?The Antigrowth ViewIn Defense ofEconomic GrowthChapter Conclusions
  20. 20. economic growthsupply factorsdemand factorefficiency factorlabor productivitylabor-force participationrateinfrastructurehuman capitaleconomies of scaleNew Economyinformation technologystart-up firmsincreasing returnsnetwork effectslearning by doingENDBACKCopyright McGraw-Hill/Irwin 2002
  21. 21. 17 - 21Copyright McGraw-Hill/Irwin, 2002Growth EconomicsProduction Possibilities AnalysisSupply Determinants of Real OutputGrowth in the AD-AS ModelU.S. EconomicGrowth RatesAccounting forGrowthProductivity Growthin the New EconomyKey TermsPreviousSlideNextSlideEndShowDeficits,Surplusesand thePublic DebtChapter 18 Next...

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