Last class we looked at the causes and effects of economic growth. Today we will learn about factors that can block or slow economic growth. You should have read the text chapter identified below in the homework section and watched the related videos. We will start class today with you working cooperatively with a partner to find a solution to the "Problem of the Day" and then there will be a lecture on our next topic. This page contains all the information you need for today's class: homework, the problem of the day, helpful resources (videos, podcasts, etc.) and an explanation of the activities we will do in class. Use the table of contents on the right to help you navigate.
Read Mankiw (Chapters 25 and 26).
Problem of the Day: You will work cooperatively with your partner to construct a response to the following prompt.
Define economic growth and economic development and explain why they do not mean exactly the same thing.
Use the production possibilities model and AS-AD to explain how the economy could experience an increase in economic growth but not an increase potential output.
Use the production possibilities model and AS-AD to illustrate an economy that experiences both an increase in economic growth and an increase in potential output.
Lecture
Barriers to Economic Growth and Development (very big file)
Daron Acemoglu and James Robinson wrote Why Nations Fail in which they argued that societies with more pluralistic ("inclusive") institutions are more likely to experience economic growth in the long-run than societies with non-inclusive ("extractive") institutions.
Related Readings