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The Role of Technological Change in Economic Growth Solved Problem 6.1   Between 1960 and 1995, real GDP per capita in Singapore grew at an average annual rate of 6.2 percent. This very rapid growth rate results in the level of real GDP per capita doubling about every 11.3 years. In 1995, Alwyn Young published… Continue reading Role of Technological Change in Economic Growth

Rapid Economic Growth in Botswana   Making the Connection Your Turn: Test your understanding by doing related problem 1.14 at the end of this chapter. MyEconLab The graph below shows the average annual growth rate in real GDP per capita between 1960 and 2009 for the most populous sub-Saharan countries. For the Democratic Republic of… Continue reading Rapid Economic Growth in Botswana

Discuss the role of the financial system in facilitating long-run economic growth. 6.2 LEARNING OBJECTIVE Saving, Investment, and the Financial System ‹#› of 33 Copyright © 2015 Pearson Canada Inc. LO6.2 14 An Overview of the Financial System Financial markets Markets where financial securities, such as stocks and bonds, are bought and sold. Financial system… Continue reading Discuss the role of the financial system

Financial intermediaries Firms, such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers. Mutual funds sell shares to savers and then use the funds to buy a portfolio of stocks, bonds, mortgages, and other financial securities. The financial system provides three key services for savers… Continue reading Financial intermediaries Firms

The Market for Loanable Funds The demand for loanable funds is determined by the willingness of firms to borrow money to engage in new investment projects. The supply of loanable funds is determined by the willingness of households to save and by the extent of government saving or dissaving. Equilibrium in the market for loanable… Continue reading The Market for Loanable Funds

The Effect of a Budget Deficit on the Market for Loanable Funds Crowding out A decline in private expenditures as a result of an increase in government purchases. When the government begins running a budget deficit, the supply of loanable funds shifts to the left. The equilibrium interest rate increases from i 1 to i… Continue reading The Effect of a Budget Deficit on the Market

Explain what happens during the business cycle. 6.3 LEARNING OBJECTIVE The Business Cycle ‹#› of 33 Copyright © 2015 Pearson Canada Inc. LO6.3 26 Some Basic Business Cycle Definitions The fluctuations in real GDP per capita shown in Figure 10.1 reflect the underlying fluctuations in real GDP.   Dating back as long as Canada has… Continue reading Explain what happens during the business cycle

The Effect of the Business Cycle on the Inflation Rate Recall that the price level measures the average prices of goods and services in the economy and that the inflation rate is the percentage increase in the price level from one year to the next.   The inflation rate usually decreases during recessions and usually… Continue reading The Effect of the Business Cycle

The Effect of Recessions on the Inflation Rate Toward the end of a typical expansion, the inflation rate begins to rise; these times are marked with blue shading. Recessions, marked by red shading, cause the inflation rate to fall. By the end of a recession, the inflation rate is below what it had been at… Continue reading The Effect of Recessions on the Inflation Rate