Chapter 9 Flashcards

1
Q

Rule of 70

A

The time it takes a variable that grows gradually over time to double =

70

Annual growth rate of vaiable

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2
Q

Sustained economic growth occurs when __________________________________

A

The amount of output produced by the average worker increases steadily

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3
Q

Labor productivity

“productivity”

A

Output per worker

Real GDP

Number of people working

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4
Q

Three factors of productivity

A
  1. More physical capital
  2. More human capital - more educated
  3. Technological progress
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5
Q

Physical capital

A

Consists of human-made resources such as buildings and machines

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6
Q

Human capital

A

The improvement in labor created by the education and knowledge embodied in the workforce

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7
Q

growth accounting

A

Estimates the contribution of each major factor in the aggregate production function to economic growth

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8
Q

Amount of physical capital per worker grows ___________

A

3% a year

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9
Q

Aggregate production function

A

A hypothetical function that shows how productivity depends on the quantities of physical capital per worker, human capital per worker, and technological progress

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10
Q

Diminishing returns to physical capital

A

When holding the amount of human capital per worker and technology fixed, each increase in physical capital per worker leads to a smaller increase in productivity

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11
Q

Total factor productivity

A

The amount of output that can be achieved with a given amount of factor inputs

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12
Q

Research and development

A

Spending to create and implement new technologies

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13
Q

Infrastructure

A

Roads, power lines, ports, information networks, and other underpinnings for economic activity

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14
Q

Property rights

A

The rights of owners of valuable itmes to dispose of those items as they choose

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15
Q

Intellectual property rights

A

The rights of an innovator to accrue the rewards of her innovation

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16
Q

Patent

A

A government-created temporary monopoly given to an innovator for the use or sale of his or her innovation

17
Q

cerrado

A

The tropical savanna land in Brazil

18
Q

Exogenous

A

The sources of technological progress were outside the models of economics and assumed to “just happen”

19
Q

Endogenous

A

The outcome of economic variables and incentives

20
Q

Convergence hypothesis

A

International differences in real GDP per capita tend to narrow over time

21
Q

Conditional convergence

A

When adjusted for differences in other factors, poor countries tend to have higher growth rates

22
Q

Sustainable long-run economic growth

A

Long-run growth that can continue in the face of the limited supply of natural resources and the impact of growth on the environment

23
Q

Negative externality

A

A cost that individuals or firms impose on others without having to offer compensation

24
Q

Logistics

A

Getting stuff where it is needed, when it is needed

25
Q
A