chapter 26 terms Flashcards
economic growth
(1) outward shift in the production possibilities curve that results from an increase in resource supplies or quality or improved technology; (2) an increase of real output (GDP) or real output per capita
real GDP per capita
inflation-adjusted output per person; real GDP/ population
rule of 70
the method of determining the number of years it takes for some measure to double, given its annual percentage increase. ex: determine number of years for price level to double ,divided 70 by annual rate of inflation
modern economic growth
historically recent phenomenon in which nations for the 1st time have experienced sustained increase in real GDP per capita
leader countries
as it relates to economic growth, countries that develop and use the most advanced technologies, which then become available to followers countries
follower countries
as it relates to economic growth, countries that adopt advanced technologies that previously were developed and used by leader countries
supply factors
the 4 determinants of an economy’s physical ability to achieve economic growth by increasing potential output and shifting out the production possibilities curve. the 4 determinants are improvements in tech plus increase in the quantity and quality of natural resources, human resources, and the stock of capital goods
demand factors
the requirement that aggregate demand increase as fast as potential output if economic growth is to proceed as quickly as possible
efficiency factor
the capacity of an economy to achieve allocative efficiency and productive efficiency and thereby fullfill the potential for growth that the supply factors make possible; the capacity of an economy to achieve economic efficiency and thereby reach the optimal point on its production possibilities curve.
labor of productivity
total output divided by the quantity of labor employed to produce it, the average product of a labor or output per hour of work
labor-force participation rate
the percentage of the working age population that is actually in the labor force
growth accounting
the bookkeeping of the supply-side elements such as productivity and labor inputs that contribute to the changes in real GDP over some specific time period
infrastructure
the interconnected network of a large-scale capital goods (such as roads, sewers, electrical grids, railways, ports, and internet) needed to operate a technologically advanced economy.
human capital
the knowledge and skills that make up a person productive.
economies of scale
the situation when a firms average total cost of producing a product decreases in the long run as the firm increase the size of a plant (and, hence, its output)
