1. Growth Policy: Why Economic Growth Rates Differ
Lesson 38
Sections 39, 40

2. Why Growth Rates Differ
Capital, Technology, and Growth Differences
Adding to Physical Capital
Investment in infrastructure
Adding to Human Capital
Investment in human potential (education)
Technological Progress
Research and Development
The Role of Government in Promoting Economic Growth
Government and Physical Capital
Infrastructure
Governments and Human Capital
Governments and Technology
Political Stability, Property Rights, and Excessive (?) Government Intervention

3. Is World Growth Sustainable?
Natural Resources and Growth, Revisited
Economic Growth and the Environment

4. Long Run Growth and the Production Possibilities Curve
The Production Possibilities Curve shows us not only the opportunity cost between production of two different items, it also shows what we can achieve in terms of economic growth.

5. Long Run Economic Growth and the Aggregate Demand-Aggregate Supply Model
Quantity of
Output Y
1980 AD
1990
Aggregate
Demand,
2000
Price
Level
Long-run
aggregate
supply,
LRAS P
1. In the long run,
technological
progress shifts
long-run aggregate
supply . . .
and
ongoing inflation.
leading to growth
in output . . .
and growth in the
money supply shifts
aggregate demand . . .

6. Distinguishing Between Long-Run Growth and Short-Run Functions
Aggregate Price Level
Real GDP
LRAS
SRAS1
SRAS2 AD
Output above potential lowers unemployment, raising wages, which brings SRAS back into potential GDP (LRAS)
Aggregate Price Level
Real GDP
LRAS
SRAS1
SRAS2 AD
Output below potential raises unemployment, lowering wages, which brings SRAS back into potential GDP (LRAS)