Chapter 25: Production And Growth

Question 1

Physical capital

Answer 1

The stock of equipment and structures that are used to produce goods and services

Question 2

Human capital

Answer 2

The knowledge and skills that workers acquire through education, training, and experience

Question 3

Natural resources

Answer 3

The inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits

Question 4

Technological knowledge

Answer 4

Society’s understanding of the best ways to produce goods and services

Question 5

Diminishing returns

Answer 5

The property whereby the benefit from an extra unit of an input declines as the quantity of an input increases

Question 6

Catch-up effect

Answer 6

The property whereby countries that start off poor tend to grow more rapidly than countries that start off rich

Question 7

Productivity

Answer 7

The quantity of goods and services produced from each unit of labor input