Unit 8 Economic Growth1.Structure ecnomic growth the growth process the sources of economic growth an increase in labor supply increases in physical capital increases in human capital increases in productivityecnomic growth ecnomic growth refers to an increase in total output. Some ecnomists define economic growth as an increase in real GDP per capita.the growth process from agriculture to industry: the Industrial Revolution growth in an industrial society due to technical change ,capital accumulation,innovation,capital productionthe sources of economic growth GDP(Y), amount of labor(L), amount of capital(K) an increase in labor supply increases in physical capital increases in human capital increases in productivity the four wheels of growth: human resouces(labor suply,education,discipline,motivation) natural resources(land,minerals,fuels, enviromental quality) capital formation(machines, factories,roads) Technology(science,engineering,management,ent repreneurship)an increase in labor supply An increasing labor supply can genetate more output. Diminishing returnsIf the capital stock remains fixed while labor increases, it is likely that the new labor will be less productive than the old labor.it ignores technological change and capital accumulation.increases in physical capital Enhance the productivity of labor Provide valuable services directlyCapital equipment produces in one year can add to the value of a product over many years.increases in human capital Individuals Firms Government increases in productivity Gorwth cant be explained by increases in the quantity of inputs can be explained only by an incease in the productivity of those inputs. Technological change 1)An advance in knowledge,or invention2)Technological change cant be measured directly. Other advances in knowledgeManagerial knowledge,personnel management, accounting procedures, data management, etc. Econimies of scale External economies of scale are cost savings that result from increases in the size of industries.Part two questions for discussion 1. How do the four wheels of growth contribute to economic growth? Give examples. 2. what is the most important factor in economic growth in modern society in your opininon? 3.What do you think of Chinese economic growth ?