ECON102 Chapter Notes - Chapter 7: Diminishing Returns, Human Capital, So Small

• School: University of Waterloo
• Department: Economics
• Course: ECON102
• Professor: Maryann Vaughan

Document Summary

Although imperfect, gdp is a good gauge of economic prosperity, and the growth of real gdp is a good gauge of economic progress. Productivity the amount of goods and services produced for each hour of a worker"s time. Growth rate over time seems to determine who is wealthy and who is not, for example since. 1890 japan as had a spectacular growth rate of 2. 76%, and such, has become one of the world"s economic superpowers. However, the data in the textbook shows us that there is no guarantee that the world"s richest countries will remain the richest or that the world"s poorest are doomed to be the poorest forever. Explaining the large variation in living standards around the world boils down to one word productivity. To show this we consider a simple model based on robinson crusoe: Robinson is a sailor stranded on a desert island.