ECO100Y5 Chapter Notes - Chapter 26: Real Interest Rate, Human Capital, Potential Output

• School: UTM
• Department: Economics
• Course: ECO100Y5
• Professor: Michael H O

Document Summary

Economic growth; sustained, long-run increases in level of real gdp. Powerful means of improving average material living standards. Increase in income leads to changes in patern of consumpion: addressing poverty and income inequality. Some people do not receive as high wage increases as the average increase. Some aren"t in labour force, so they do not beneit at all. Forgone consumpion: economic growth is achieved by consuming fewer goods today, important cost of growth, lower consumpion now and in near future is cost of obtaining higher consumpion in more distant future. Social costs: some machines and workers skills" are obsolete. Is the quality of the labour force b: growth in physical capital, factories, machines, electronic equipment grows through process of investment b. Is the quality of the physical capital: technological improvement a. Innovaion that introduces new products: new ways of producing exising products, new forms of organizing economic acivity.