Notesale: Turn your study into money

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ACROECONOMIC
OBJECTIVE

ECONOMIC
GROWTH AND
EQUITY IN
THE
DISTRIBUTIO
N OF INCOME

ECONOMIC

GROWTH

An increase in the capacity of an
economy to produce goods and
services, compared from one
period of time to another
...
For comparing one
country's economic growth to
another, GDP or GNP per capita
should be used as these take
into account population
differences between countries
...
More
specifically, GDP represents the monetary
value of all goods and services produced
within a nation's geographic borders over a
specified period of time
...
The per capita
GDP is especially useful when comparing
one country to another because it shows
the relative performance of the countries
...
8 trillion
...
The question we want to answer is
this: how well off are these two countries?
With only this information, you'd probably say
that the land of Macro is better off, right? So
would I! As you can see, the real GDP is higher
in the land of Macro: $1
...

 However the population in the land of Macro
is 1 billion people and the population in the
land of Mini is only 8 million people
...
Real GDP per capita is the
value of national output divided by the
population
...

 So, now we can see that in the land of Macro,
the real GDP per capita = $1
...
In the land of Mini, the
real GDP per capita is $600 billion / 8 million
people, or $75,000
...
In the land of Mini, the
average person probably has a nicer house and
more material possessions
...



THE

SIGNIFICANCE OF

ECONOMIC GROWTH
 Economic

growth
rates achieved by
countries around the
world vary widely
...


Rapid growth

PRODUCTION
POSSIBILITY

CURVE(PPC)
OR PRODUCTION
POSSIBLITY MODEL

(PPM)

The graphical representative of
all the combination of two
good and
services(opportunities) which
can be produced at a given
level of resources at a given
technology
...

 Improvements in the quality of
resources (for example, through
more educated labour, or improved
physical capital through
technological change)
...
Physical capital (capital)
2
...
Natural capital (land)

PHYSICAL
(CAPITAL)

CAPITAL

Man-made
resources such
as machines
that aid
production
...


N ATURAL
(LAND)

CAPITAL

Land includes
all natural
resources
...


ECONOMIC GROWTH
AND LRAS CURVE

Present choices and future growth

FACTORS THAT CAUSE
ECONOMIC GROWTH

EQUITY AND EQUALITY IN
THE DISTRIBUTION OF
INCOME
One of the macroeconomic goals for a
government is the equity in the distribution of
income of its people
...

 Equality with respect to income would mean that
each member of a society receives exactly the
same income
...

 Incomes are earned in a market when individuals sell or
hire out their factor of production to others
...
In a free
market it may be difficult for some individuals to earn an
income at all, leaving them unable to buy goods and
services
...

 The diagonal 45° line denotes the line of
complete equality

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