Page 533 - The Principle of Economics

is not the slow growth of recent years but rather the rapid growth during the 1950s and 1960s. Perhaps the decades after World War II were a period of unusually rapid technological advance, and growth has slowed down simply because technological progress has returned to a more normal rate.
QUICK QUIZ: Describe three ways in which a government policymaker can try to raise the growth in living standards in a society. Are there any drawbacks to these policies?
CONCLUSION:
THE IMPORTANCE OF LONG-RUN GROWTH
In this chapter we have discussed what determines the standard of living in a nation and how policymakers can endeavor to raise the standard of living through policies that promote economic growth. Most of this chapter is summarized in one of the Ten Principles of Economics: A country’s standard of living depends on its ability to produce goods and services. Policymakers who want to encourage growth in standards of living must aim to increase their nation’s productive ability by encouraging rapid accumulation of the factors of production and ensuring that these factors are employed as effectively as possible.
CHAPTER 24 PRODUCTION AND GROWTH 547
Growth Rate (percent per year)
4.0 3.5 3.0 2.5 2.0 1.5 1.0
0
Figure 24-2
THE GROWTH IN REAL GDP
PER PERSON. This figure shows the average growth rate of real GDP per person for 16 advanced economies, including the major countries of Europe, Canada,
the United States, Japan, and Australia. Notice that the growth rate rose substantially after 1950 and then fell after 1970.
SOURCE: Robert J. Barro and Xavier Sala-i- Martin, Economic Growth (New York: McGraw-Hill, 1995), p. 6.
1870– 1890– 1890 1910
1910– 1930– 1930 1950
1950– 1970– 1970 1990