Principles of Macroeconomics / Unit 4 MAC 0303 short lesson, about 20 seconds
Two Percent a Year
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The idea
The leading industrial economies have grown about two percent a year per person for two centuries. That rate sounds small and is not.
In practice
Two percent a year multiplies income roughly sevenfold over a century.
Where people slip
Because growth compounds, a gap of one percentage point becomes enormous when left to run for decades.
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