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Economic growth
An increase in real GDP occurring over some time period OR An increase in real GDP per capita occurring over some time period
Real GDP per capita
Dividing real GDP by size of population
Rule of 70
We can find the number of years it will take for some measure to double, given its annual percentage increase, by dividing that percentage increase into the number 70
Modern economic growth
Sustained and ongoing increases in living standards that can cause dramatic increases in the standard of living within less than a single human lifetime
Leader countries
Rich countries with real GDP per capita that grows by 2-3% per year
Follower countries
Can grow much faster because they can simply adopt existing technologies from rich leader countries
Supply factors
Changes in the physical and technical agents of production
quantity of labor
Increases in ________ + increases in labor productivity cause economic growth.
Demand factor
To achieve the higher production potential created by the supply factors, households, businesses, and government must purchase the economy’s expanding output of goods and services
Efficiency factor
To reach its full production potential, an economy must achieve economic efficiency as well as full employment
Economic growth
An increase in real GDP occurring over some time period OR An increase in real GDP per capita occurring over some time period
Real GDP per capita
Dividing real GDP by size of population
Rule of 70
We can find the number of years it will take for some measure to double, given its annual percentage increase, by dividing that percentage increase into the number 70
Modern economic growth
Sustained and ongoing increases in living standards that can cause dramatic increases in the standard of living within less than a single human lifetime
Leader countries
Rich countries with real GDP per capita that grows by 2-3% per year
Follower countries
Can grow much faster because they can simply adopt existing technologies from rich leader countries
Supply factors
Changes in the physical and technical agents of production
Demand factor
To achieve the higher production potential created by the supply factors, households, businesses, and government must purchase the economys expanding output of goods and services
Efficiency factor
To reach its full production potential, an economy must achieve economic efficiency as well as full employment
Labor productivity
Measured as real output per hour of work
Labor-force participation rate
Percentage of the working-age population actually in the labor force
Growth accounting
System to assess the relative importance of the supply-side elements that contribute to changes in real GDP
Infrastructure
Highways and bridges, public transit systems, wastewater treatment facilities, water systems, airports, educational facilities, and so on
Human capital
Knowledge and skills that make a worker productive
Economies of scale
Reductions in per-unit production costs that result from increases in output levels
Information technology
Combination of the computer, fiber-optic cable, wireless technology, and the Internet
Increasing returns
A given percentage increase in the amount of inputs a firm uses leads to an even larger percentage increase in the amount of output the firm produces
Network effects
Increases in the value of the product to each user, including existing users, as the total number of users rises
Learning by doing
Firms that produce new products or pioneer new ways of doing business experience increasing returns
Con
Negative externalities, doesnt solve sociological problems, unsustainable
Pro
Better living standards, improved infrastructure, reduced poverty
Labor productivity
Measured as real output per hour of work
Labor-force participation rate
Percentage of the working-age population actually in the labor force
Growth accounting
System to assess the relative importance of the supply-side elements that contribute to changes in real GDP
Infrastructure
Highways and bridges, public transit systems, wastewater treatment facilities, water systems, airports, educational facilities, and so on
Human capital
Knowledge and skills that make a worker productive
Economies of scale
Reductions in per-unit production costs that result from increases in output levels
Information technology
Combination of the computer, fiber-optic cable, wireless technology, and the Internet
Increasing returns
A given percentage increase in the amount of inputs a firm uses leads to an even larger percentage increase in the amount of output the firm produces
Network effects
Increases in the value of the product to each user, including existing users, as the total number of users rises
Learning by doing
Firms that produce new products or pioneer new ways of doing business experience increasing returns
Note 
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