Essay on History of Economics

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Economics 515
Midterm 1

1. Economic growth vs. economic development, define extensive growth & intensive growth

Economic growth is the sustained increase in the output of goods/services of a society.
Economic development is economic growth plus changes in technical and institutional arrangements by with output are produced.

Extensive growth- increase in output due to increase in inputs (labor force grows, land stock increases)
Intensive growth- increase in output per unit of input – productivity increases (technological change)

2. List 2 data sources researchers use to estimate historical standards of living; three indicators of economic development other than National Income measures of interest to economists

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List 4 contributions of the earliest civilizations (those that eventually formed the Babylonian Empire) and explain how each was important to continued economic growth.

 Writing- originated in Sumarian civilization o 3500 BCE-Sumarian draw pictograms on clay tablets o Bureaucratic necessity: records of tax collection/tributes o 3200 BCE- ideograms- symbols for sun, moon, phonograms, cuneiform script=”wedge” writing
 Arithmetic- keeping track of accounts, creation of 0 value
 Weights/measures- standard of trade
 Geometry- measurement of fields/buildings (architecture)
 Code of Law- civilization required development of law, regulate interactions of men/women o Code of Hammurabi c. 1700 BCE- regulation of contracts, irrigation procedures, regulating lending parties (max interest

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