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ECON 222: Chapter 9
Long Term Economic Growth
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is the sustained upward trend in the economy’s output per person over time.
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real GDP per capita
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RGDP per capitat = (RGDPt / Populationt)
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Standard of Living
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Real GDP per capita
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Growth Rate of RGDP per capita
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Growth Rate of RGDP per capitat = (RGDP per capita t- RGDP per capita t-1)/(RGDP per capitat-1)) * 100
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Economic progress
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Growth Rate of RGDP per capita
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growth rate of NGDP
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Growth Rate of NGDP per capitat = (NGDP per capitat - NGDP per capitat-1)/(NGDP per capitat-1)) * 100
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The Rule of 70
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Doubling Time : 70 divided by the % rate of growth
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real gdp
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constant
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nominal
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current
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when using the rule of 70 percents are
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whole numbers
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DDP Deflator
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=N/R*100
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Savings=
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Investment spending
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The budget balance is the difference
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between tax revenue and government spending.
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The budget surplus is the difference between
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between tax revenue and government spending when tax revenue exceeds government spending.
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The budget deficitis the difference between
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tax revenue and government spending when government spending exceeds tax revenue.
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CLOSED ECONOMY: I
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I = GDP-C-G
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CLOSED ECONOMY: PRIVATE SAVINGS
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Private savings = DI – C
Privatesavings=GDP+Tr–T-C
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CLOSED ECONOMY: PUBLIC SAVINGS
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Public savings (budget balance,
government savings) = T – Tr – G
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CLOSED ECONOMY: NATIONAL SAVINGS
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National savings = GDP – C – G
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OPEN ECONOMY:
INVESTMENT (I)
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I = GDP-C-G-X+IM
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OPEN ECONOMY: PRIVATE SAVINGS
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Private savings = DI – C
Privatesavings=GDP+Tr–T-C
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OPEN ECONOMY: PUBLIC SAVINGS
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Public savings (budget balance,
government savings) = T – Tr – G
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OPEN ECONOMY: NATIONAL SAVINGS
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National savings = GDP – C – G
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OPEN ECONOMY:
NCI=
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NCI=IM-X
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SO IN A CLOSED ECONOMY I=
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I=NS
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