Chapter 20: Economic Growth in the Global Economy
1. Make sure you connect students back to the basics of economics by reminding them that economic
growth as a goal arises from the fact of scarcity.
2. The growth rate versus stability issue could be illustrated by a world where taking risks and trying new
4. It may be worth highlighting that once we introduce the AS/AD analysis, anything that shifts out a
5. As a peek ahead to supply-side issues, you may want to mention that ultimately, incentives are crucial
determinants of the growth of the production possibilities curve over time, by leading to changes in work
effort, savings and investment, risk taking, etc.
7. The complex determinants of economic growth can be used to explain to students why a great deal of
8. It can be worth expanding the labor as human capital discussion to show that investment principles
9. You may wish to note that a country that increased investment based on the typical relationship
between investment and growth would be less successful if it increased investment in areas that did not
10. When referring to the savings rate-GDP growth connection, it is often worth emphasizing that
11. A connection to earlier discussions in the text can be drawn by asking students why weak protection
of property rights would reduce the incentives to both work hard and invest.
12. You may want to tie economies of scale and protection of property rights together by emphasizing that
14. It can be worth noting that a move to freer markets will generally yield a growth spurt as the society
moves to a now higher effective productive possibilities curve. However, once the economy has caught
up to that now higher curve, that temporarily higher transition growth rate will no longer be sustainable
(although the growth rate can still remain higher than before the move to freer markets began).