Chapter 7 - good Flashcards
Define Productivity
The quantity of goods and services produced from each unit of labor input.
What is the importance of productivity
Higher productivity leads to higher standards of living.
What are the factors of production
- physical capital
- human capital
- natural resources
4.Technological knowledge
Define physical capital
The stock of equipment and structures used to produce goods and services.
Define human capital
The knowledge and skills that workers acquire through education, training, and experience.
Define natural resources
Inputs into the production of goods and services provided by nature.
Define technological knowledge
Society’s understanding of the best ways to produce goods and services.
Define production function
A mathematical relationship describing how the quantity of output is produced from the quantities of inputs.
PRovide an example of production function
Example:
𝑌=𝐴*F (L,K,H,N)
Y = output
A= technology level
L = labour
K = physical capital
H = human capital
N = natural resources
Define diminishing returns
As the quantity of an input increases, the marginal product of that input decreases, holding all other inputs constant.
Define catch-up effect
Poorer countries tend to grow more rapidly than richer countries because they can adopt existing technologies.
What are the determinants of Productivity
- Physical capital
- Human capital
- Natural resources
- Technolgical knowledge
Defined and provide and example of Physical capital
More tools and equipment lead to higher productivity.
Example: An increase in the number of computers in an office enhances workers’ efficiency.
Defined and provide and example of Human Captial
Investment in education and training improves workers’ skills.
Example: A workforce with higher education levels can adopt and implement new technologies more effectively.
Defined and provide and example of Natural resources
Availability of resources such as minerals, oil, and fertile land contributes to higher productivity.
Example: Countries with abundant natural resources like Canada benefit from higher productivity in sectors like mining and agriculture.
Defined and provide and example of Technological KNowledge
Advancements in technology improve the production process.
Example: The invention of the internet has revolutionized communication and productivity across various industries.
What are the policies to promote economic growth
- savings and investment
- investment from abroad
- education and training
- Health and nutrition
- property rights and political stability
- free trade
- research and development
define and provide an example for Savings and investment
Encouraging savings leads to more investment in capital goods.
Example: Tax incentives for saving can increase the capital stock and boost productivity.
define and provide an example for Investment from Abroad
Foreign direct investment and foreign portfolio investment bring in capital and new technologies.
Example: Multinational companies setting up factories in developing countries transfer technology and skills.
define and provide an example for education and training
Investing in education enhances human capital.
Example: Government scholarships and subsidies for higher education can produce a more skilled workforce.
define and provide an example for Health and nutrition
Better health and nutrition improve workers’ productivity.
Example: Public health programs reduce disease and enhance workers’ physical capabilities.
define and provide an example for Property rights and political stability
Secure property rights and stable political environments attract investment.
Example: Countries with strong legal systems and stable governments attract more foreign and domestic investment.
define and provide an example for Free trade
Open trade policies enable countries to specialize and access larger markets.
Example: Free trade agreements like NAFTA (now USMCA) enhance economic integration and growth.
define and provide an example for Research and development
Investing in R&D promotes technological innovation.
Example: Government grants for scientific research lead to new technologies and improved productivity.
