In-Class Notes - Economic Growth

Economic Growth
Economic Growth refers to the
long-term overall improvements
in the economy. It is the increase
in the output of final goods and
services produced within a
nation’s borders over a specified
period of time-that is, an increase
in a nation’s real GDP over time.
Importance of Economic Growth
 To account for population increase,
economists usually measure economic
growth in terms of per capita increase
in real GDP.
 Real GDP Per Capita is an increase in the
real dollar value of all final goods and
services that are produced per person
for a specified period of time.
One of the
six major
goals of
the U.S.
Increasing the
standard of
consumers having
more money to
spend increases
supply of goods
and services.
More money in
the economy
lessens domestic
problems like
poverty, crime..
Competing in
the Global
Increase in
technology and
n creates
greater GDP.
Resources: As
people’s incomes
increase, they
generally pay
more in taxes
which helps pay
for national
education, fire
and police
Requirements for Economic Growth
Natural Resources:
Access to plentiful
resources such as;
timber, coal, natural
gas and minerals.
Human Resources: A
nation’s capacity to
produce goods and
services. Economists
examine the amount
of labor input that is
Capital Resources: The
more farmland,
machines, factories,
and production plants
in a nation, the more it
is likely to produce and
the more its economy
will grow.
New businesses create
and sell new products
and provide new
markets and jobs for
economic growth.
Poll Time
Increasing Productivity
 Labor productivity: A measure of how
much each worker produces in a given
period of time, usually one hour.
 Productivity growth: An increase in the
output of each worker per hour of work.
Impact on Productivity Growth
Technological Advances: Invention and
innovation, new knowledge and new ways of
applying this knowledge are the leading sources
of productivity growth.
Capital Deepening: When the amount of a
nation’s capital goods increases faster than the
size of that nation’s workforce, capital
deepening an increase in the amount of capital
goods available per worker results.
Educated and Skilled Labor Force: As the
level of skill required to perform certain jobs
increases, employees must continue to learn and
to improve their skills to keep their jobs.
Additional Factors
Many factors other than education can
affect productivity levels such as:
• Attitudes and motivation levels of
• Dedication to the job.
• Loyalty to a company.
Highly dedicated workers produce more,
as do workers who enjoy their jobs.
Poll Time