ECON 1102 Week 3/ Chapter 7 Notes
ECON 1102 Week 3/ Chapter 7 Notes ECON 1102
U of M
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This 2 page Class Notes was uploaded by Colin Fritz on Sunday September 25, 2016. The Class Notes belongs to ECON 1102 at University of Minnesota taught by David Bradley in Fall 2016. Since its upload, it has received 16 views. For similar materials see Principles of Macroeconomics in Macro Economics at University of Minnesota.
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Date Created: 09/25/16
Econ 1102 Week 3/Chapter 7 Notes Colin Fritz Wealth of Nations Three facts: 1. GDP per capita varies greatly between different countries 2. Everyone used to be poor 3. There are growth miracles and disasters that happen Factors of production Physical Capital – physical capital represents tools, so if a country has more and better tools then they have more physical capital Human Capital – this basically means more education, if a country invests more resources into education and training then they will have more human capital Technological knowledge – knowledge of how the world works (or knowledge that makes technology possible) Institutions – the “rules of the game” for economic incentives Institutions can encourage efficient organization of the factors of production which can result in economic growth. Here are these institutions: Property Rights – This is the right to benefit from one’s work, so if there is Communist rule and someone is working to give what they produce to the Government they won’t work as hard as if they were working for themselves Honest Government – From the book – “Corruption is like a heavy tax that bleeds resources away from productive entrepreneurs Political Stability - In many nations civil war, dictatorship and anarchy have destroyed the ability for the economy so a stable political system is a necessity A dependable legal system – this allows for the protection of property rights Competitive and open markets – Competitive markets allows for efficient allocation of resources resulting in economic growth
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