Monday

 Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 9 The Real Economy in the Long Run
Chapter 25 of 36 Production and Growth
Section 10 of 23
…
We have determined a society's standard of living depends on its productivity.
Its productivity depends on
· physical capital per worker
· human capital per worker
· natural resources per worker
· technological knowledge
· society’s intangible capital including rule of law
…
Things government can promote and strengthen to increase productivity and living standards include
1· saving and investment
2· investment from abroad
3· education
4· health and nutrition
5· property rights and political stability
6· free trade
7· research and development
8· population growth
…
Capital is a produced factor of production, and a society can change its amount of capital.
If this year the economy produces new capital goods then next year it will have a larger capital stock and be able to produce more goods and services.
So, one way to raise future productivity is increasing current investment in capital production.
…
One of the Ten Principles of Economics: people face trade-offs.
This principle of trade-offs is important when considering capital accumulation.
Because resources are scarce
· devoting more resources to current capital production for producing future consumptions goods
· requires devoting less resources to producing current consumption goods
For society to invest more in capital, it must consume less and spend more of its current income on capital goods.
At the individual level savings mean better standards of living later both for the individual and for society at large because of the investments, via financial markets of the savings, in capital.
…
In upcoming sections we will examine
· how the economy's financial markets coordinate saving and investment
· how government policies influence saving and investment amount in the economy
Encouraging saving and investment is one way government can stimulate economic growth and raise the economy's standard of living in the long run.
… …
improve living standards
seikatsu suijun o koujou saseru
(this can also be written seikatsu suijun o kōjō saseru, but Google Translate doesn’t yet recognize ō, ā, ē, ī, ū)

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