10. The Facts of growth

Question 1

The sources of growth

Answer 1

1. Increases in output per worker: increase in capital per worker => movements along the production function
2. Improvements in the state of technology : shifts up the production function

Question 2

Growth coming from :

Answer 2

• capital accumulation, cannot sustain growth by itself

- technological progress, the key to growth

Question 3

A higher saving rate :

Answer 3

• cannot permanently increase the growth rate of output
• can sustain a higher level of output

The economy with the higher saving rate will have a higher level of output per person than the other
An economy that sustains a higher rate of technological progress will eventually overtake all over economies.

Question 4

PPP - purchasing power parity

Answer 4

• a method of adjustment used to allow for international comparisons of GDP