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What is the definition of economic growth according to the lecture?
The rate of change in real GDP per capita over a long period of calendar time.
Why is real GDP preferred over nominal GDP when measuring growth?
As it measures the quantity of goods and services produced at constant prices, reflecting actual productivity rather than monetary values.
What are the four key points noted in the definition of economic growth?
Focus on real GDP growth.
Measured in per capita terms to account for population growth.
Assessed over long periods, typically 7 to 10 years.
Measured from the same point of the business cycle (peak to peak or trough to trough).
What was significant about economic growth before the 18th century?
It was virtually nonexistent until then, marking a shift in human productivity.
Who is considered the originator of the Classical model of economic growth?
Adam Smith
What are the three prerequisites for economic growth according to Adam Smith?
Security of property.
Control of primogeniture/A stable legal system.
Infrastructure provided by the state.
What effect does the division of labour have on productivity?
It increases output through improved dexterity, time savings, and the ability to use machinery.
How did Adam Smith view the relationship between different social classes?
He believed that all sectors (landlords, manufacturers, and farmers) moved forward together in harmony.
What was Thomas Malthus's theory regarding population growth?
Believed it grows geometrically while food supply grows arithmetically, leading to potential starvation unless checked.
What is the outcome of Malthus's theory on economic growth?
According to Malthus, economic growth does not raise average living standards because population growth offsets productivity gains.
What was David Ricardo's main theory of economic growth?
The theory linked growth to the theory of rent, emphasizing how land scarcity could limit profits and growth.
What happens to profits when population expands according to Ricardo?
As population expands, more land is needed, which pushes up rents and squeezes profits, eventually halting growth.
How did Karl Marx's views differ from those of Ricardo?
Focused on the exploitation of workers, viewing profits as derived from unpaid labour, in contrast to the view of capitalists and landlords.
What was the key difference between Ricardo's and Marx's understanding of class conflict?
Ricardo saw conflict between landowners and capitalists, while Marx identified conflict between workers and capitalists.
What prevented Marx's predicted social revolution in England?
Improvements in real wages and working conditions after 1850 undermined predictions of a proletariat revolution.
What is the overall summary of the Classical model of economic growth?
It emphasizes class divisions, where capitalists drive growth through profit investment but face inevitable conflicts with landlords and workers.
