TAILIEUCHUNG - Lecture Economics of social issues - Chapter 11: Economic growth: Why is the economic road so bumpy?

Any change in the growth rate of the economy will have a great influence on the level of economic activity and per capita real GDP in the future. Public policies can be designed that enhance the determinants of economic growth identified in this chapter. By increasing the rate of economic growth, we can improve our own future standard of living. | Chapter 11 Economic Growth: Why is the Economic Road So Bumpy? Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin What Is Economic Growth? 11- Click 1 – GDP line will wipe left slowly 11- The Rate of Economic Growth 3% rate of growth 2% rate of growth Click 1 – 3% growth line Click 2 – 2% growth line 11- United States Economic Growth 11- What Are Business Cycles? Time Real GDP Expansion Peak Contraction Trough Short-run fluctuations Long-run growth trend Click 1: Short-run fluctuations Click 2: Phases of the business cycle Click 3: Long-run growth trend Leading Economic Indicators Index Stock Market Prices Real Money Supply An Index of Consumer Expectations Average Workweek for Production Workers in Manufacturing Interest Rate Spread (10-year Treasury bonds less federal funds) Initial claims for unemployment insurance New building permits granted New orders for consumer goods and materials Manufacturers’ orders for new plant and equipment (nondefense capital goods) Venders’ performance index for delivery of index 11- 11- Theories of Business Cycles Theories of Expectations Theory of Innovations Inventory Theories Monetary Theories Real Business Cycle Theories Exogenous Theories 11- The Determinants of Economic Growth Good X Good Y A B C D Click 1: PPC shifts out; C; D 11- The Determinants of Economic Growth Consumer Goods Capital Goods A B C D E F H I G Click 1: Point D Click 2: Arc EF Click 3: Point C Click 4: HII 11- The Determinants of Economic Growth Productivity Factors Productivity of labor = average product of labor Human capital Technology 11- The Recent Slowdown in Growth Contributing Factors Technology Slowdown Labor Force Factors Saving and Investment The Composition of Output Government: Regulation and Public Debt The 2001 Recession The 2007 Peak and Beyond Percentage Change in Quarterly GDP in 2008 (Real 2000 Dollars) 11-