Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics > Ch. 7 - Production + Growth > Flashcards

Ch. 7 - Production + Growth Flashcards

1
Q

Two Facts about income and growth around the world…

A

Fact 1: vast differences in living standards around the world
Fact 2: great variation in growth rates across countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

B/c of great variance of growth b/w countries…

A

not necessarily poor forever (Signapore)

richer can be over-taken by faster growing countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

productivity =

A

avergae Q of G+S per worker per hour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

y =

A

real GDP = Q of output produced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

L =

A

quantity of labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

y/L =

A

productivity (output/worker)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

when workers are productive real GDP is high and so are incomes (t/f)

A

t

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What determines productivity + growth rates? (4 things)

A
  1. level of technology
  2. physical capital per worker
  3. human capital per worker
  4. natural resources per worker
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Physical Capital is…

A

-stock of equipment + structures for G+S production (depicted as K)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Human Capital is…

A

-knowledge/skills per worker from education, training , experience, etc. (depicted as H)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Natural Resources are…

A

inputs into production from nature; some countries richer than others (depicted as N)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Technological Knowledge is…

A

societal understanding of best way to produce G+S (eg. assembly lines) (depicted A)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Production Function for productivity + factors is… (formula)

A 
y = AF (L , K , H, N)
productivity = technology x inputs to produce output (labour, physical capital, human capital, natural resources)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

incr. K can boost production (t/f). it is called…

A

true, called investment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

incr investment is a tradeoff b/w _______ + _____ consumption. B/c more capital = fewer consumption goods (due to ___)

A

current; future; scarcity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Diminishing returns to capital is…

low K gains is _____ country; high K gains is_____ country

A

as K rises, production and standard of living rise, but incr. is much higher when little amount of K to begin with, otherwise it is very minimal.
-poor; rich

17
Q

Catch Up Effect

A

-lower countries having faster growth rates b/c of minimal K (physical capital) invested already. What is invested helps significantly.

18
Q

To raise K/L gov’t can encourage… (2)

When best?

A
  1. foreign direct investment (owned + operated by foreign)
  2. foreign portfolio investment (owned foreign, operated by local)
    - returns flow back to foreign investor.
    - best when a poor country can’t save enough to “jump start”
19
Q

To increase productivity…. (2)

A
  1. Human Investment

2. Respect for Property Rights

20
Q

human Investment incr productivity b/c…

A
  • education makes workers more effective

- health: healthy workers are more productive

21
Q

Respect for property rights helps productivity b/c…

A

-there is less investment w/ political instability, corrupt police, or ineffective courts (why invest if its not safe?)

22
Q

Free trade types: (2)

-which more successful?

A
  1. inward oriented policies (avoiding foreign investment)
    - generally a fail
  2. outward oriented policies (promote integration into world market)
23
Q

Technological progress is the main reason living standards rise over time (t/f)
why?

A

t.

-knowledge is a public good (shared freely)

24
Q

How do gov’ts encourage technological progress?

A

patent laws, tax incentives, research grants, etc

25
Q

Population Growth Effects on Economy (3)

A
  1. Stretch Natural Resources
  2. Diluting the Capital Stock
  3. Promote Technology Progress
26
Q

Pop Growth Stretches Natural Resources is…

A

a Malthus argument; did not account for technological progress and production growth so not as much of a factor

27
Q

Pop growth Dilutes Capital Stock b/c…

A

bigger population = higher labour = lower K/L (capital/worker)
-human capital effects: more kids = larger education system strain

28
Q

Pop. Growth Promotes Technological Progress by…

A

more ppl = more discoveries (more scientists, engineers, inventors, etc)
-scarcer resources = higher prices = larger incentive to find alternatives

29
Q

t/f Long Run living standards are not determined by productivity.

A

f. they are

Economics (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions