The Checklist

Tuesday

• Ch. 16
• Exchange Rate = Price
• Good = Foreign Currency
• Why might the depreciation of the dollar be good?
• US vs. European inflation
• The big questions:
• Why are some nations richer than others?
• Why are some nations getting rich faster than others?
• Can anything be done to help poor nations?
• Rule of 70

Thursday

• Much of the next exam is about what is covered today. This material is not in the book.
• Differences in growth rates have large effects on income.
• Economic growth = percentage changes in real GDP per capita
• US economic growth in the 20^th Century was 2%
• Solow Growth Model
• 1) Rich Nations have more capital goods than poor nations
• 2) Periods of growth are also periods of investment
• Conclusion: tools lead to growth
• Y = F(L,K)
• Investments are costly
• Investments increase output at a decreasing rate
• Marginal Product
• Steady State
• Net Investment
• Implications: 1) No new growth and 2) Convergence
• Problems with these models:
• Poor nations aren’t catching up
• No one seems to be coming to a steady state
• Lucas