25.2 Labor Productivity Growth

MyEconLab Concept Video

Real GDP grows when the quantities of the factors of production grow or when persistent advances in technology make them increasingly productive. To understand what determines the growth rate of real GDP, we must understand what determines the growth rates of the factors of production and the rate of increase in their productivity. You’re going to see how saving and investment determine the growth rate of physical capital and how the growth of physical capital and human capital and advances in technology interact to determine the economic growth rate.

We are interested in real GDP growth because it contributes to improvements in our standard of living. But our standard of living improves ...

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