ECON 295 Chapter 26: Chapter 26 notes.docx
9 Jan 2015
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Economic growth: sustained, long-run increases in the level of gdp. This chapter will discuss three aspects of economic growth real gdp, real per capita gdp, and productivity. A)benefits of economic growth: rising average material living standards. Economic growth tends to change the whole society"s consumption patterns, shifting away from tangible goods and toward services. In developed countries, services account for roughly 70% of aggregate consumption. Economic growth provides the higher incomes that lead to a demand for a cleaner environment, thus leading to higher average living standards that are not directly captures by measures of per capita gdp: alleviation of poverty. Even in a growing economy, redistribution policies will be needed if poverty is to be reduced. A rapid growth rate makes the alleviation of poverty easier politically. It is much easier for a rapidly growing economy to be generous toward its less fortunate citizens. Or neighbours than it is for a static economy.
