Ch 20 aggregate incomes

Question 1

gdp per capita

Answer 1

gdp/total population

Question 2

purchasing power parity ppp

Answer 2

exchange rates account for differences in income, but dont account for price differences
-ppp constructs the cost of a representative bundle of commodities in each country and adjusts gdp so that a dollar in each country can purchase this representative bundle

mexican income per capita in ppp =
mexican in pc x peso ppp

Question 3

gdp per worker

Answer 3

income per worker = gdp/number of people in employment

Question 4

productivity

Answer 4

value of goods and services that a worker generates for each hour of work

Question 5

three main reasons why productivity differs across countries

Answer 5

1. human capital, ex having a degree
2. physical capital, ex machines
3. technology

Question 6

aggregate production function

Answer 6

production function that describes how the factors of production combine to make gdp
consists of labor, physical capital, and land

Question 7

total efficiency units of labor

Answer 7

product of the number of workers and average human capital (efficiency)

Question 8

3 parts of factors of production

Answer 8

labor, physical capital, land