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These documents are my detailed summaries/notes of chapters 1-4. Ready for the midterm. Also will be useful for final exam
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Chapter 1Friday, 29 September 2023 09:05
Notes:
- Most powerful way to rank inequality is through income
- Rich/Poor ratio (90/10 ratio) the ratio between the income of the two individuals
at the ninetieth and tenth percentiles
- Most common way to measure income is GDP
- GDP consists of 4 adjustments:
○ Divide GDP by total population
○ Correct for changes in spending power (real GDP)
○ Must be measured in the same unit (often USD)
○ Correct for purchasing power parity (PPP) (what $1 will actually buy you)
- Real GDP growth rate is the percentage change in (real) GDP from one year to the
next
- Directly comparing GDP growth is better because it provides better
representations than the GDP values themselves
- The rule of 70 can give us an estimation of how long it will take GDP per capita to
double
- The emergence of capitalism in 18th century Europe made way for
unprecedented speeds of growth and progressively became the dominant
economic system in rich countries
- Adam Smith is said to be the "founding father of modern economics"
- His idea was that the economy could function without any person or institution
having to consciously maintain it (the invisible hand)
- In the language of economics technology is the process that takes a set of
materials and other inputs (labour and capital goods) and creates an output
- Figure 1 shows that all economic growth happened very recently in human
history
- The first spike of growth happened in Britain and was caused by the industrial
revolution
- This era brought new ideas, new discoveries, new methods and new machines
- The process of the industrial revolution has been more or less continuous since
the 18th century (the process of technological innovation)
- Technological process - a change in technology that reduces the amount of
resources required to produce an output
- A good example of this is the time taken to produce light. Nowadays the
productivity of producing light is half a million times greater than it was among
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