Econ Growth 2b

Question 1

New Variable E. What does it stand for?

Answer 1

Labour efficiency

Question 2

What does labour efficiency show?

Answer 2

– this shows you how much better
labour is compared to a number of years ago

Question 3

Labour efficiency grows with _____ represented by _____?

Answer 3

technological advancement, ∆E/E

Question 4

What is the productions formula?

Answer 4

Y = F (K, L x E)

Question 5

What does L x E represent?

Answer 5

per effective worker

Question 6

What is the break even investment?

Answer 6

(depreciation + n + g) k

Question 7

Gk provides capital for every new effective?

Answer 7

worker created by technological advance

Question 8

Increase in capital must be equal to

Answer 8

g + n

Question 9

MPK must equal?

Answer 9

depreciation = g + n

Question 10

Change in GDP will equal?

Answer 10

g + (population growth n)

Question 11

Growth rate of rental price must equal?

Answer 11

0

Question 12

Output per labour grows at the same rate as?

Answer 12

real wage – labour income = W/P x L

Question 13

Growth rate of MPL is?

Answer 13

= ∆E/E = g, which is technological growth

Question 14

If you want to keep the ratio of 1 - a then you must keep ______ the same – so real wage must grow at the same rate as ______

Answer 14

MPL X L/Y, output

Question 15

The real interest you pay is your ____ and any earning is your additional_____ and that extra unit is your ____

Answer 15

cost, revenue, MPK

Question 16

Why can poorer countries grow faster?

Answer 16

This is because they have lower capital stock
- This is due to diminishing returns on capital – as capital stock increases your output will increase by much less –

Question 17

if the net profit is more
than interest rate which equals rental price then people will buy more?

Answer 17

machines, capital

Question 18

Interest rate