Reading 6
Economic Growth
3 modules 26 min
0/3
Exam Focus
Forecasts of economic growth rates have important implications for investment decisions. Understand the preconditions of growth, how the growth rate can be increased, and what drives economic growth. Be able to compare and contrast competing theories of growth.
Finally, be able to use growth accounting equations to forecast the potential growth rate of an economy.
Modules
- Module 6.1Growth Factors and Production FunctionCompare factors favoring and limiting economic growth in developed and developing economies. · Describe the relation between the long run rate of stock market appreciation and the sustainable growth rate of the economy. · Explain why potential GDP and its growth rate matter for equity and fixed income investors. · Contrast capital deepening investment and technological progress and explain how each affects economic growth and labor productivity.10 min · 4 LOS
- Module 6.2Growth Accounting and Influencing FactorsDemonstrate forecasting potential GDP based on growth accounting relations. · Explain how natural resources affect economic growth and evaluate the argument that limited availability of natural resources constrains economic growth. · Explain how demographics, immigration, and labor force participation affect the rate and sustainability of economic growth. · Explain how investment in physical capital, human capital, and technological development affects economic growth.7 min · 4 LOS
- Module 6.3Growth and Convergence TheoriesCompare classical growth theory, neoclassical growth theory, and endogenous growth theory. · Explain and evaluate convergence hypotheses. · Describe the economic rationale for governments to provide incentives to private investment in technology and knowledge. · Describe the expected impact of removing trade barriers on capital investment and profits, employment and wages, and growth in the economies involved.9 min · 4 LOS