Macro - Lecture 5 (Economic Growth and Supply Side Policies) Flashcards
1
Q
What is economic growth?
A
The sustained increase in real GDP per capita over time.
2
Q
What is Exogenous Growth Theory (Solow)?
A
Growth driven by capital, labor, and technology but subject to diminishing returns.
3
Q
What is Endogenous Growth Theory (Romer)?
A
Growth driven by innovation, knowledge, and spillovers, with no diminishing returns.
4
Q
What are supply-side policies?
A
Policies aimed at increasing the productive capacity of the economy.
5
Q
What are examples of supply-side policies?
A
Education and training.
Infrastructure development.
Tax incentives for R&D.
Labor market reforms.
6
Q
Why is knowledge important for economic growth?
A
Knowledge generates positive externalities, drives innovation, and does not depreciate over time.
