4 factorsofeconomicgrowth
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Transcript of 4 factorsofeconomicgrowth
Factors that Lead to Economic Growth
Factors that Lead to Economic Growth
Unit 4 NotesUnit 4 Notes
Economic GrowthEconomic Growth There are 4 factors that influence There are 4 factors that influence
economic growth within a country:economic growth within a country: Investment in Human CapitalInvestment in Human Capital Investment in Capital GoodsInvestment in Capital Goods Natural Resources availableNatural Resources available EntrepreneurshipEntrepreneurship
The presence or absence of these 4 The presence or absence of these 4 factors determine the country’s Gross factors determine the country’s Gross Domestic Product for the yearDomestic Product for the year
There are 4 factors that influence There are 4 factors that influence economic growth within a country:economic growth within a country: Investment in Human CapitalInvestment in Human Capital Investment in Capital GoodsInvestment in Capital Goods Natural Resources availableNatural Resources available EntrepreneurshipEntrepreneurship
The presence or absence of these 4 The presence or absence of these 4 factors determine the country’s Gross factors determine the country’s Gross Domestic Product for the yearDomestic Product for the year
What is Human Capital?What is Human Capital?
All of the skills, talents, education, and All of the skills, talents, education, and abilities that human workers possess---abilities that human workers possess---and the value that they bring to the and the value that they bring to the marketplacemarketplace Examples: computer/reading/writing/math Examples: computer/reading/writing/math
skills, talents in music/sports/acting, ability skills, talents in music/sports/acting, ability to follow directions, ability to serve as group to follow directions, ability to serve as group leader & cooperate with group membersleader & cooperate with group members
A country’s Literacy Rate impacts A country’s Literacy Rate impacts Human Capital--the percent of the Human Capital--the percent of the population over 15 that can read/writepopulation over 15 that can read/write
All of the skills, talents, education, and All of the skills, talents, education, and abilities that human workers possess---abilities that human workers possess---and the value that they bring to the and the value that they bring to the marketplacemarketplace Examples: computer/reading/writing/math Examples: computer/reading/writing/math
skills, talents in music/sports/acting, ability skills, talents in music/sports/acting, ability to follow directions, ability to serve as group to follow directions, ability to serve as group leader & cooperate with group membersleader & cooperate with group members
A country’s Literacy Rate impacts A country’s Literacy Rate impacts Human Capital--the percent of the Human Capital--the percent of the population over 15 that can read/writepopulation over 15 that can read/write
How does Human Capital Influence Economic
Growth?
How does Human Capital Influence Economic
Growth? Nations that invest in the health, Nations that invest in the health,
education, & training of their people education, & training of their people will have a more valuable workforce will have a more valuable workforce that produces more goods & servicesthat produces more goods & services
People that have training are more People that have training are more likely to contribute to technological likely to contribute to technological advances, which leads to finding advances, which leads to finding better uses of natural resources & better uses of natural resources & producing more goodsproducing more goods
Nations that invest in the health, Nations that invest in the health, education, & training of their people education, & training of their people will have a more valuable workforce will have a more valuable workforce that produces more goods & servicesthat produces more goods & services
People that have training are more People that have training are more likely to contribute to technological likely to contribute to technological advances, which leads to finding advances, which leads to finding better uses of natural resources & better uses of natural resources & producing more goodsproducing more goods
What are Capital Goods?What are Capital Goods?
All of the goods that are produced in the country and then used to make other goods & services Examples: tools, equipment,
factories, technology, computers, lumber, machinery, etc.
What are some capital goods used in our classroom?
All of the goods that are produced in the country and then used to make other goods & services Examples: tools, equipment,
factories, technology, computers, lumber, machinery, etc.
What are some capital goods used in our classroom?
How do Capital Goods influence Economic
Growth?
How do Capital Goods influence Economic
Growth? The more Capital Goods a country
has = the more goods & services they are able to produce
The US has superior capital goods.
The more Capital Goods a country has = the more goods & services they are able to produce
The US has superior capital goods.
What are Natural Resources?
What are Natural Resources?
All of the things found in or on the All of the things found in or on the earth; “gifts of nature”earth; “gifts of nature”
Examples: rivers, minerals, Examples: rivers, minerals, animals, plants, oil, timber, etc.animals, plants, oil, timber, etc.
All of the things found in or on the All of the things found in or on the earth; “gifts of nature”earth; “gifts of nature”
Examples: rivers, minerals, Examples: rivers, minerals, animals, plants, oil, timber, etc.animals, plants, oil, timber, etc.
How do Natural Resources Influence Economic Growth?
How do Natural Resources Influence Economic Growth?
Countries that have a lot of natural Countries that have a lot of natural resources are able to use them to resources are able to use them to produce goods & services cheaper produce goods & services cheaper than a country that has to import than a country that has to import natural resourcesnatural resources
Russia is rich in natural resources, Russia is rich in natural resources, but because of the harsh climate & but because of the harsh climate & size, it’s hard for Russians to get to size, it’s hard for Russians to get to them.them.
Countries that have a lot of natural Countries that have a lot of natural resources are able to use them to resources are able to use them to produce goods & services cheaper produce goods & services cheaper than a country that has to import than a country that has to import natural resourcesnatural resources
Russia is rich in natural resources, Russia is rich in natural resources, but because of the harsh climate & but because of the harsh climate & size, it’s hard for Russians to get to size, it’s hard for Russians to get to them.them.
What is Entrepreneurship?
What is Entrepreneurship?
It can be several things:It can be several things: Starting your own businessStarting your own business Inventing something newInventing something new Changing the way something was Changing the way something was
previously done so that it works previously done so that it works betterbetter
Can you name any entrepreneurs Can you name any entrepreneurs that you’ve heard of in the past?that you’ve heard of in the past?
It can be several things:It can be several things: Starting your own businessStarting your own business Inventing something newInventing something new Changing the way something was Changing the way something was
previously done so that it works previously done so that it works betterbetter
Can you name any entrepreneurs Can you name any entrepreneurs that you’ve heard of in the past?that you’ve heard of in the past?
How does Entrepreneurship
Influence Economic Growth?
How does Entrepreneurship
Influence Economic Growth? Entrepreneurship creates jobs Entrepreneurship creates jobs
and lessens unemploymentand lessens unemployment Encourages people to take risks, Encourages people to take risks,
and in doing so, they’ve created and in doing so, they’ve created better healthcare, education, & better healthcare, education, & welfare programswelfare programs
The more entrepreneurs a The more entrepreneurs a country has, the higher the country has, the higher the country’s GDP will be…country’s GDP will be…
Entrepreneurship creates jobs Entrepreneurship creates jobs and lessens unemploymentand lessens unemployment
Encourages people to take risks, Encourages people to take risks, and in doing so, they’ve created and in doing so, they’ve created better healthcare, education, & better healthcare, education, & welfare programswelfare programs
The more entrepreneurs a The more entrepreneurs a country has, the higher the country has, the higher the country’s GDP will be…country’s GDP will be…
How is Economic Growth Measured?
How is Economic Growth Measured?
Economic growth in a country is Economic growth in a country is measured by the country’s Gross measured by the country’s Gross Domestic Product (GDP) in one Domestic Product (GDP) in one yearyear
GDP = the total amount of final GDP = the total amount of final goods and services produced in goods and services produced in one year within a countryone year within a country
Economic growth in a country is Economic growth in a country is measured by the country’s Gross measured by the country’s Gross Domestic Product (GDP) in one Domestic Product (GDP) in one yearyear
GDP = the total amount of final GDP = the total amount of final goods and services produced in goods and services produced in one year within a countryone year within a country
Gross Domestic ProductGross Domestic Product
GDP is a domestic measurement GDP is a domestic measurement because it measures only what has because it measures only what has been produced within the country--been produced within the country--this doesn’t include products that this doesn’t include products that are imported.are imported.
It is much better for the economy of It is much better for the economy of a country to produce its own goods a country to produce its own goods and services (this increases the and services (this increases the country’s GDP).country’s GDP).
GDP is a domestic measurement GDP is a domestic measurement because it measures only what has because it measures only what has been produced within the country--been produced within the country--this doesn’t include products that this doesn’t include products that are imported.are imported.
It is much better for the economy of It is much better for the economy of a country to produce its own goods a country to produce its own goods and services (this increases the and services (this increases the country’s GDP).country’s GDP).
Gross Domestic ProductGross Domestic Product
Measuring the GDP each year Measuring the GDP each year can:can: Compare one country’s economy to Compare one country’s economy to
anotheranother Check a country’s economic Check a country’s economic
progress over timeprogress over time Show if the economy is growing or Show if the economy is growing or
not not
Measuring the GDP each year Measuring the GDP each year can:can: Compare one country’s economy to Compare one country’s economy to
anotheranother Check a country’s economic Check a country’s economic
progress over timeprogress over time Show if the economy is growing or Show if the economy is growing or
not not
Standard of LivingStandard of Living The higher a country’s GDP = a The higher a country’s GDP = a
better standard of living for the better standard of living for the people within the countrypeople within the country
In order for a country to have an In order for a country to have an increasing GDP, it must invest in increasing GDP, it must invest in human capital through education human capital through education & training, and it must produce & training, and it must produce goods that have value to be sold goods that have value to be sold within the country or exported.within the country or exported.
The higher a country’s GDP = a The higher a country’s GDP = a better standard of living for the better standard of living for the people within the countrypeople within the country
In order for a country to have an In order for a country to have an increasing GDP, it must invest in increasing GDP, it must invest in human capital through education human capital through education & training, and it must produce & training, and it must produce goods that have value to be sold goods that have value to be sold within the country or exported.within the country or exported.