Macroeconomics – 7. Economic Growth and Productivity

  1. Define economic growth.
  2. What are the four supply factors of growth?
  3. What two other factors are important in economic growth?
  4. Use PPF analysis to contrast Adam Smith’s golden age of growth versus Thomas Malthus’ doomsday.
  5. Explain the basic underlying principle of the Neoclassical growth model and provide examples.
  6. Why does capital deepening not lead to a proportional increase in output?
  7. What happens to worker wages and the return on capital as a result of capital deepening?
  8. Explain why capital deepening in the absence of technological change leads to economic stagnation.
  9. Define, and provide examples of, technological change.
  10. Use the concept of the aggregate production function to illustrate the differing roles that capital deepening and technological change play in economic growth.
  11. Which factors of growth have been the most instrumental in increasing labor productivity?
  12. According to economist Edward Denison,  what has been the most important source of economic growth in the US?
  13. Explain the relationship between productivity and wages.
  14. Is more growth always good?
  15. How might the government use public policy to stimulate growth? Discuss both Demand-side and Supply-side options.

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