Economic Growth 10.3 Economic Growth—is the increase in the output of final goods and services produced within a nations borders over a given period of time (I.e. real GDP). Real GDP per capita—an increase in the real dollar value of all final goods and services that are produced per person. Ex. $10,000 per person in 2003 to $10,500 per person in (GDP/# of people).

Increasing the Standard of Living 10.3 Note; without long term economic growth, a nations standard of living declines! Ex. People have more $ to spend Increased supply of goods and services More $ to enjoy more leisure time More $ in the economy can mean less poverty, less crime, more health care.

Increasing the standard of living Competing in the global market— The U.S. was the leading country in the world in the 20 th century in terms of GDP. This led to a very high standard of living. The U.S. is not the fastest growing in GDP today!

Requirements for Economic Growth 10.3 How do we stimulate our economy? Natural resources—Ex. Coal, timber, minerals, natural gas, but does have to import oil, diamonds, etc. Must protect our natural resources We are somewhat dependent on international markets and conditions for our economy— problems?

Requirements for Economic Growth 10.3 Capital Resources—Farmland, machines, factories, production plants, in a nation, the more likely that the nation will grow. A high level of capital resources leads to a high level of economic growth!

Requirements of Economic Growth 10.3 Entrepreneurship– The willingness of entrepreneurs to take risks involved in starting new businesses and creating new products is vital to economic growth. Government policies that make it easier for entrepreneurs to start new businesses help the economy grow.

Increasing Productivity 10.3 Labor productivity—is a measure of how much each worker produces in a given period of time. (Usually measured in output per hour). Productivity Growth—Is an increase in the output of each worker per hour of work. Ex. Clock factory: 2003 each worker produced 5 clocks/hr.

Productivity Factors 10.3 Factors in productivity growth: Level of available technology—Invention and innovation are leading sources of productivity growth. Note: R & D—Research and Development— are expenditures that indicate the % of total GDP that a nation devotes to improving its technology.

Capital Deepening 10.3 Capital to Labor ratio—the amount capital goods available per worker. Divide the total amount capital goods available by the number of workers. Capital deepening—an increase in the amount of capital goods available per worker.

Increased productivity 10.3 Educated and skilled workforce— Workers face stiffer competition for jobs as the world goes more global. Workers must continue to learn and improve their skills or face being left behind! Businesses must invest in human resources in order to compete.