Wealth and Economic Growth

Question 1

what is GDP per capita?

Answer 1

GDP per capita is the avg output of a person.
GDP per capita = RGDP/ population

Question 2

What is GDP per capita used for?

Answer 2

1) to estimate aggregate standard of living
2) consider aggregate growth of economy

Question 3

how do you calculate future GDP?

Answer 3

initial GDP ( 1 + growth rate) * no. of years
OR
B ( 1+ g) * n = E

Question 4

how do you calculate the predicted rate of GDP over two years?

Answer 4

Use the rule of doubles ; 70/growth rate
70/ g

Question 5

What is the wealth of nations of depended on?

Answer 5

1 ) Factors of production - tecnological knowledge: knowledge of the world and the economy
human capital- skills, education, productive knowledge
physical capital - tools, infrastructure, equipment

2) instituitions. instituitions create incentives and this improves factors of production and increases GDP per capita.

Question 6

How do instituitions create economic growth?

Answer 6

1) property rights
2) political stability
3) honest government
4) dependable legal system
5) competitive and open markets