Book contents
- Frontmatter
- Brief Contents
- Contents
- Acknowledgments
- To the Student
- To the Teacher
- Part I Introduction
- Part II The National Accounts
- Part III Trends and Cycles
- Part IV Financial Markets
- Part V Aggregate Supply
- 9 Aggregate Production
- 10 Economic Growth
- 11 The Ideal Labor Market
- 12 Unemployment and the Labor-Market Process
- Part VI Aggregate Demand
- Part VII Macroeconomic Dynamics
- Part VIII Macroeconomic Policy
- Part IX Macroeconomic Data
- Symbols
- Glossary
- Guide to Online Resources
- Index
- References
10 - Economic Growth
from Part V - Aggregate Supply
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Brief Contents
- Contents
- Acknowledgments
- To the Student
- To the Teacher
- Part I Introduction
- Part II The National Accounts
- Part III Trends and Cycles
- Part IV Financial Markets
- Part V Aggregate Supply
- 9 Aggregate Production
- 10 Economic Growth
- 11 The Ideal Labor Market
- 12 Unemployment and the Labor-Market Process
- Part VI Aggregate Demand
- Part VII Macroeconomic Dynamics
- Part VIII Macroeconomic Policy
- Part IX Macroeconomic Data
- Symbols
- Glossary
- Guide to Online Resources
- Index
- References
Summary
To us in the twenty-first century, a growing economy is the norm. It was not always so. In the last chapter, we investigated the problem of aggregate supply: What determines the level of GDP produced? In this chapter, we use that analysis to ask the question: what makes GDP grow over time? Our analysis allows us to address questions like: Is it more factor inputs or using them better (technological progress) that explains the growth of the economy? How fast can the economy hope to grow in the long run? What effect will growth have on personal incomes? What factors promote or retard growth? Why have some economies grown rapidly and others stagnated?
Why Growth Is Important
Look at Figure 10.1, which shows the real GNP per capita of the United States from 1789 to 2009. Two features stand out: the pronounced business cycle and the secular trend, reflecting two centuries of strong economic growth . The ups and downs of the business cycle certainly matter. Booms add to human well-being; slumps are a substantial source of human misery. But economic growth is far and away the most important force shaping the face of the world in which we live.
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- Chapter
- Information
- Applied Intermediate Macroeconomics , pp. 353 - 404Publisher: Cambridge University PressPrint publication year: 2011