Chapter 7 Flashcards
Production Function
The relationship between inputs used in production and the quantity of output
A production function describes…
A firms inputs and outputs
An Aggregate Production Function is? What does it show?
A production function of the whole economy. It shows what goes into producing the output for an overall economy!
An Aggregate Production Function with GDP as it’s output includes…
Workforce, human capital, physical capital and technology
An Aggregate Production Function with GDP Per Capita includes…
Take a picture human capital per person, physical capital per person and technology per person
Components of Economic Growth include..
Physical Capital (infrastructure, the plant equipment firms use), Infrastructure, (roads, etc.), human capital (skills and knowledge ), technology
Labor Productivity is
The value produced per worker/ per hr worked
What determines how productive workers are?
human capital (knowledge, education and skills), technological change (invention and innovation-how one can apply their knowledge), economies of scale
A Healthy Climate / Economic Growth highlights these key points:
Education, Health, Savings / Investment, Infrastructure, Scientific Research
What 3 things must be present in an economy for it to succeed?
Human Capital, Physical Capital and Technology
What is Capital Deepening? Who can it apply to?
Is the level of capital per person increasing as society increases. It can apply to both “additional human capital per worker”, “additional physical capital per worker”, and apply to years of experience a worker may have
What is Economic Convergence?
Is when poorer countries grow faster than richer countries
How do economists measure economic growth
Tracking Real GDP
Which individual believed that making all individuals equal before law was the single most important trigger of the sustained economic development phase in human history
Deirdre McCloskey
Economic Growth Patterns around the world are known as..
Modern Economic Growth
What values do economic growth adhere to?
Rule of Law and Protection of Property and Contractual Rights
What is the part of economic growth that is unexplained by inputs (physical capital and human capital) called?
Residual which is attributed to growth in technology
The widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s is known as
The Industrial Revolution
The only way GDP per capita can grow is if
the productivity of the average worker rises or if there is an increase in capital
The Compound Growth Rate means..
that we multiply the growth by a base that includes past GDP growth
When is increasing population important to the average person?
when the rate of income exceeds the population growth
The law of diminishing returns suggests..
that as an economy continues to increase its human and physical capital, the marginal gains to economic growth will diminish
Which type of countries benefit the most from capital deepening
Low income countries
