Growth

Question 1

What defines growth?

Answer 1

Change in full-employment level of production. Increase in productive capacities. Shift of the PPF outwards.

Question 2

What determines growth?

Answer 2

Tech, productivity growth(2-3%), population growth(1%).

Question 3

Qualitative aspects of growth?

Answer 3

(K) Tech improvements (L) Human Capital.

Question 4

Quantitative aspects of growth?

Answer 4

(K) More machines/investment (L) More laborers/pop growth.

Question 5

Reasons for “Productivity Slowdown” from 1973-1996

Answer 5

I decreased, R&D slowed; Regulations increased; Price of oil increased (these things decreased profitability). The economy shifted from manufacturing to service, perhaps as a result of regulations or increased competition. Workforce changed in nature to more unskilled people.

Question 6

What were the two growth regimes from 1950 to now?

Answer 6

Regulated Capitalism from 1950-1979 (Wage-led). Liberal/unregulated Capitalism from 1980-2019 (Profit-led/financier controlled).

Question 7

Tenants of Regulated Capitalism

Answer 7

Human Development; Full employment policy; welfare state; limit foreign competition; multilateral foreign policy.

Question 8

What cause regulated capitalism to go downhill?

Answer 8

Around 1966 things got out of balance and inflation grew because workers demanded too much wage growth for their productivity.

Question 9

What caused liberal capitalism to decline?

Answer 9

Culminating in the 2007 financial crisis, there was too much emphasis on profit and too much speculation. Workers were squeezed too much.

Question 10

Tenants of Liberal Capitalism

Answer 10

Fight Inflation; Promote Deregulation; Free trade; Focus on defense; Unilateral foreign policy.