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Hi, my name is Mariano Torras.
I'm Professor of Economics at Adelphi University in New York.
We are going to be doing a lecture series on macroeconomics.
In the last lecture,
we briefly mentioned the notion of economic growth which has
historically been understood to represent progress over time.
But now, it's time to be more specific.
What exactly do we want to be growing?
Economists track the growth over time in overall economic output,
meaning the total output of goods and services.
We want economic output to grow because we believe this improves our standard of living.
There are a number of ways of measuring output,
and we will get to a few of them here.
But first, remember our discussion of productive factors from the last lecture?
It is such factors namely labor, capital, and land,
as well as the raw materials from the land that generate economic output.
So it is helpful to think of the total amount of factors that a country has as its wealth
and the total output or product from its factors as its income.
We naturally want our national wealth to grow over time,
but if our income or output grows each year,
then this will help our national wealth grow too.
Here is a key point: any country must decide how much of its output should be consumed,
that is, devoted to consumer items like apparel,
food, or electronics, and how much should be invested.
From the standpoint of a nation,
what we mean by investment is producing more productive factors.
In other words, increasing our wealth.
Consumption, in contrast, does not add to a nation's wealth.