Unit 6; Day 1

• Economic Growth
• sustained increase in real GDP over time
• Sustained increase in Real GDP per Capita over time

• Why grow?
• Growing leads to greater prosperity for society
• Lessens the burden of scarcity.
• Increases the general level of well-being
• Conditions for Growth
• Rule of Law
• Sound Legal and Economic Institutions
• Economic Freedom
• Respect for Private Property
• Political & Economic Stability
• Low Inflationary Expectations
• Willingness to sacrifice current consumption in order to grow
• Saving
• Trade
• Types of Capital
• Physical:
• Tools, machinery, factories, infrastructure
• Physical Capital is the product of Investment.
• Investment is sensitive to interest rates and expected rates of return.
• It takes capital to make capital.
• Capital must be maintained.
• Human
• People are a country’s most important resource. Therefore human capital must be developed.
• Education
• Economic Freedom
• The right to acquire private property
• Incentives
• Clean Water
• Stable Food Supply
• Access to technology