Macro Module 2 + 3 Readings

(The attached PDF file has better formatting.)

Chapter 3: Introduction to Economic Growth (Modules 2 and 3)

Read the introduction on pages 27-28.

Skim “facts about economic growth” on pages 28-31. This is background to the theory. You are tested on the principles, not on the figures for each country.

Read pages 31-34: “World Poverty and Income Inequality.” Income inequality has become a political byword. Slow economic growth, not income inequality, keeps people poor.

The final exam does not test the historical details in “Long-term Growth in the United States and Other Rich Countries” (page 34). Read “Patterns of Economic Growth” on pages 34-35 to know what this chapter covers.

Read pages 35-46. Focus on the production function and the Solow growth model, which is used in several modules and tested on the final exam. Know the diminishing marginal product of labor and marginal product of capital. Understand the difference between the transition period and the steady state.

Skip Appendix B on page 49.

Read Parts A and C of the appendix: growth accounting and the Cobb-Douglas production function on pages 48-50. The final exam does not test the Solow residual (Part B).

Review Questions B.7, B.8, and B.9 on pages 46-47. The final exam asks similar questions.