Eco 200 – Principles of

Macroeconomics

Chapter 17: Economic growth

Economic growth
 Measured by annual rate of change in:
 real GDP
 per capita real GDP
Rule of 72
 Rule of 72:
 Approximate # of years for a balance to
double = 72 / growth rate for the variable
Economic growth and
economic welfare
 Problems with using economic growth
rate as a measure of social welfare:
 income distribution
 quality of life
 leisure time
 externalities
Determinants of growth
 changes in the quantity and quality of
available resources
 changes in technology
Economic growth
 Economic growth = growth rate of TFP
+ growth rate of resources