Book: The Facts Of Growth Flashcards
Do fluctuations matter in the long run,
No they are mere wrinkles on the whale when it comes to the overwhelming growth over the century
What is the key to sustained growth
Technological progress
What measure is typically used to determine standard of living
Output per person aka gdp per capita although distribution metrics and ppp is also interesting
Why cant you compare the wealth of nations dimply by converting their currency at exchange rates
Exchange rates varry a lot and also the cost if living is lower in poorer countries
How is ppp cinstructed
You take the consumption habits of the denizens of some nation and quantifes it in international dollars so f.ex us pleb buys 1 food and 2 car while a nicaraguan pleb buys 1 food and 0.2 car the us pleb is thus 0.8 car richer wich coresponds too 2 international $
How is productivity best mesured
Output per hour per worker of a nation as population and working time differs
What is the force if compounding
Perceptual growth grows exponentially
Have the economies of the oecd aka the rich nations started to converge
Yes poorer rich countries tend to grow faster and now there is not as stark a difference as in the past although this is not universal
Have the asian countries started to converge towards the us wealth
Yes they are growing rapidly although they still have far to come with a few exceptions
Does the african countries converge towards the us
No not realy they have largely remained poor with slower growth although it has been looking better recently in the two thousands and there are some exceptions like Botswana and Equatorial Guinea that have the highest growth in the world
What is the aggregate production function
That production is a function of capital and the labor force
Y=f(K,N)
What determines the efficiency of the utilization of labor and capital
The state of technology, higher technology makes more with less
What is meant by stating that the aggregate production has a constant return to scale
That an increase in both capital and labor will increase the economy in the same proportion
Yx = f(Kx,N*x)
What is meant by stating that the aggregate production function has a decreasing return to labor and capital
That a greater difference between capital and labor will lead to a decreasing output gain as resources are utilized inefficiently. A hundred seamstresses with one needle is just about as affective as one seamstress with one needle
Where foes economic growth per capita come from
Technological progress and capital accumulation
