FIN 34220 Lecture Notes - Lecture 5: Production Function
Document Summary
Economic growth: aggregate supply in the long run. In the long run (decades), population can change. If the firms are spending enough, the capital stock will be rising in the long run. Because that"s the important that makes people more skilled and therefore more productive and makes machinery more productive. According to that function, you can increase employment. So when population is rising, increasing labor supply, there is more people available for work, so employment would rise. Can see some implications for the long run for different scenarios. Gdp would rise then because there"s more l. but the amount produced per person would decrease, which would then pull down the average and in effect the margin. If got an increase in capital stock, it would increase production, which would be an increase in output per person. If everyone got more skilled as technology improved, it would increase the output per person.
