MRU27.1: Video Activity: The Hockey Stick of Human Prosperity

What question launched the field of economics?

"Where does prosperity come from?"

Professor Boudreaux makes the point that the poorest person living in a modern economy like the U.S. today:

is incredibly wealthy compared to her ancestors.

Which of the following scenarios would result in economic growth in the country of Everland?

GDP doubles while prices remain the same.

GDP per capita in the countries of Neverland and Everland are 2,000 and 500, respectively. This suggests that, other things being equal, the returns from capital investment would be:

Greater in Everland.

Professor Boudreaux points out that today we often wonder what causes poverty. What's the best response?

Poverty has been the normal state of affairs for most of human history; only recently have institutions created the incentives to motivate investment in the factors of production that lead to prosperity.

What event in the 18th century caused GDP per capita in the world to suddenly start rising?

The Industrial Revolution

According to Professor Boudreaux, the average person in 1000 B.C., the average person in 500 B.C., and the average person in 500 A.D. all had what in common?

They were all poor.

Which of the following is true but not immediately obvious from observing the "hockey stick" of human prosperity?

While average GDP per capita has risen in recent centuries, it still differs greatly among countries.

The transition from each of us doing many things to each of us doing one thing and then trading for the goods we consume has contributed to a sharp increase in per capita GDP in modern economies. This fact highlights the importance of ________ to economic growth.

institutions like property rights and competitive and open markets

The pattern of GDP per capita growth over time is known as the "hockey stick of human prosperity" because:

it resembles a hockey stick when graphed.

Unlike today, prior to the 18th century, most people:

knew how to make many of the things they consumed.

Prior to the 18th century, average life expectancy was about 30 years. Today:

life expectancy in some countries is about 80 years.