Chap 7 Flashcards
the process whereby an economy as a whole turns economic inputs such as human capital, physical capital, and technology into output measured as GDP per capita
aggregate production function
an increase by society in the average level of physical and/or human capital per person
capital deepening
the rate of growth when multiplied by a base that includes past GDP growth
compound growth rate
the rights of individuals to enter into agreements with others regarding the use of their property providing recourse through the legal system in the event of noncompliance
contractual rights
pattern in which economies with low per capita incomes grow faster than economies with high per capita incomes
convergence
the accumulated skills and education of workers
human capital
the widespread use of power-driven machinery and the economic and social changes that occurred in the first half of the 1800s
Industrial Revolution
a component of physical capital such as roads, rail systems, and so on
infrastructure
putting advances in knowledge to use in a new product or service
innovation
advances in knowledge
invention
the value of what is produced per worker, or per hour worked (sometimes called worker productivity)
labor productivity
the period of rapid economic growth from 1870 onward
modern economic growth
the plant and equipment used by firms in production; includes infrastructure
physical capital
the process whereby a firm turns economic inputs like labor, machinery, and raw materials into outputs like goods and services used by consumers
production function
the process of enacting laws that protect individual and entity rights to use their property as they see fit; laws must be clear, public, fair, and enforced, and applicable to all members of society
rule of law
