ECON 1012 Week 3
ECON 1012 Week 3 ECON 1012
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This 1 page Class Notes was uploaded by Jaimee Kidd on Sunday September 25, 2016. The Class Notes belongs to ECON 1012 at George Washington University taught by Roberto M. Samaniego in Fall 2016. Since its upload, it has received 3 views. For similar materials see Principles of Economics II (ECON 1012) in Economics at George Washington University.
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Date Created: 09/25/16
ECON 1012 Week 3 Economic Growth • Neoclassical Growth Theory o Technical progress is driving growth o Increases productivity o Capital Increases o At some point the growth stops § à Doesn’t tell us where technological growth comes from • New Growth Theory o Innovation doesn’t just happen by accident; it happens because of profit as an incentive § à tells us where technical progress comes from ______________________________________________________________________________ Patents • rights to an idea/invention; cannot be duplicated o incentive for innovation; to go through costly, risky situations for reward • Makes sure an inventor gets control of profit and credit o Patent is an example of a legal monopoly § In microeconomics you learn economies with monopolies are inefficient because things are priced just for profit, however, with innovations competition is needed and profit is needed as an incentive to compete and innovate Process of innovation in New Growth Theory is called creative destruction: an essential part of innovation is that industries/jobs are destroyed as new things beat them out; winners and losers. • Example: typewriters vs computers Unemployment: (1) Frictional- unemployment because it takes time to find a job (2) Cyclical- job cycle makes finding a job at this particular time longer (3) Structural- additional factor as to why there is unemployment a. Important in technical progress because there will always be skills that become obsolete and other skills that aren’t there enough yet that are needed