EC202 1nd Edition Lecture 40Outline of Last Lecture I. Fixed exchange ratesII. Stabilization monetary policyOutline of Current Lecture II. Impressive growthIII. Compound interestIV. Average labor productivityCurrent Lecture-impressive growth-Over the past two centuries in industrialized nations-Impressive increases in material well-being – in the standard of living - measured by output per person-Real GDP per person-Measures the quantity of goods and services available to the typical resident of a country at a particular time-Small differences in growth rates can have large long-run effects-Because of the power of compound interest-Compound interest: the payment of interest not only on the original deposit but on all previously accumulated interest-average labor productivity-We can define total real output per person as the product of two terms--average labor productivity and the share of the employed population-Y = total real output-N = number of employed workersThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.-POP = total population-(Y/POP) = (Y/N) x (N/POP)-Real GDP per person = (Y/POP)-Average labor productivity = (Y/N)-Share of employed population = (N/POP)-(Y/POP) = (Y/N) x (N/POP)-Total real output per person is the product of two terms – average labor productivity and the share of the employed population-Total real output per person can grow only to the extent that growth occurs in -Worker productivity - (Y/N) -The fraction of the population that is employed – (N/POP)-In the long run-Increases in real output per person arise primarily from increases in average labor
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