Econ 102 1st Edition Lecture 10Outline of Last Lecture I. Review for ExamOutline of Current LectureI. What Causes Technological ProgressII. Economic Growth RatesIII. From the Economists Audio AdditionCurrent LectureI. 8.4 What Causes Technological Progress?a. Competitionsi. creative destruction 1. The view that a firm will try to come up with new products and more efficient ways to produce productsto earn monopoly profits.b. Induced Innovations i. Some economists have emphasized that innovations come about through inventive activity designed specifically to re-duce costs. This is known as induced innovation.c. Education, Human Capital, and the Accumulation of Knowledgei. EX: When US drafted men for war, more people went to college because then you were not drafted (Animal House movie)d. Application 5i. If your idea is going to be stolen by the government, very little incentive to Research and Develop new ideasThese 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.e. Application 6i. Cultural Expectations f. Economic Growth- Winners and Losers?i. New technologies benefit everyoneg. Economic Growth- Big Picturei. Widening of the income distribution1. Problem- people need to feel that they can move from lower class to middle class- if they cant they wont feel compelled to pursue new ideasII. Economic Growth Ratesa. Are poor countries catching up?i. convergence1. The process by which poorer countries close the gap with richer countries in terms of real GDP per capita.b. Chinai. They're catching up “converging”ii. A lot go technological progress c. Application 1i. Global Warming is having a greater impact on the southernhemisphereii. Affects productivity and morale of workforceIII.From the Economists Audio Additiona. Some definitionsi. Moore ’ s Law : 1. computing power doubles every 18 months2. every 18 months- 2 years people would buy new computers and printersa. not as relevant todayii. Hollowing Out :1. idea that mid-level jobs are disappearing while very low end holds steady and very top becomes more prosperousiii.Solow’s Productivity Puzzle1. idea that technological progress is “everywhere but inthe data”2. may be explained by glut of cheap labor that makes itcheaper for firms to offer very low real wages to workers rather than replace them with new technolo-giesa. EX: Accountant Bookkeeper “dont replace me with technology I will just work for a lower wage!”b. Audio- Ryan Aveni. General Revolution of Technologies 1. Impact on workers2. Process of Hollowing outa. technology is good at routine level work- middleskill line work, and technology has directly sub-stituted thatb. If you dig into what has been happening- as a result of hollowing outi. people are competing for work and low wage jobsii. Invest in labor saving technologies3. Online schoolinga. More people are using online schooling to reacha degree they previously could not haveb. High school graduation rate has been flat for generations4. Etsya. home crafters can reach a market they previ-ously were unable toii. Ties together first part of course to the next things we talk aboutiii.NEW Graph 3 1. Y on the x-axis2. Price level= CPI on the y-axis3. Does not dot over from graph one or two4. Prices are “sticky” - they do not adjust quickly5. If prices increasea. Y* is vertical as the Long Run Aggregate Supplyi. Real wages decrease as prices increaseii. due to COLAs workers negotiate an in-crease in wagesb. The pink curve is the Keynesian Aggregate Sup-ply
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