Lecture 9 - Economic Growth (EASY) Flashcards
Long run equilibrium model assumptions (3)
Prices flexible
Markets fully competitive
Fixed FOP
What is this concept to represent this equilibrium known as
Steady state
What does steady state show
Shows the balanced growth path
What is the steady state’s Balanced growth path
All real variables that change over time grow at the same rate.
How is standard of living measured, and what has happened to it overtime
Standard of living increased, measured by real GDP/capita
Relationship between growth in GDP and growth in GDP per capita
And what does this suggest
GDP per capita grows slower than real GDP
Suggesting high GDP per capita countries grow more slowly. (Poor countries grow quicker)
What is happening to some developed countries.
Convergence (lower growth rates)
Upholds idea of rich countries slower growth while poorer experiencing rapid growth e.g Japan
However what is the state worldwide (2)
Convergence is less apparent worldwide
Living standards are still very different.
Pre industrial growth 1300-1600, what can we see
European economies show growth
Impact of Industrial Revolution on England
GDP per capita grew substantially
So what does this imply
Growth means changes in industrial structure (as shown through the IR)
What are workers doing as a result of growth?
Growth increases holiday (leisure time) and income
(Graph shows average annual hours worked has fallen)
What is happening to innovation and the ideas industry
R&D increasing
What is being happening as a result of increased innovation
Increased knowledge / patents.
How does growth associate to health, happiness, and pollution and inequality
Health - (better health systems) higher life expectancy
Happiness - increase using life satisfaction.
Pollution - increase in co2 emissions
Inequality - increase in inequality.
