Economic Growth, Productivity, Living Standards

Question 1

Compound Interest

Answer 1

Accumulated interest

X = Y * (1+r) raised to the power of time

Question 2

Average Labour Productivity

Answer 2

Y/POP = Y/N *N/POP

Question 3

Solow Growth Model

Answer 3

-	Tells us how capital and labour are used in the production of different goods and services: 	
Y = F(K , N)
Y = Output
K = Capital
N = Labour
Two Assumptions:
1.	Decreasing marginal product
2.	Constant returns to scale

Question 4

Negative externality

Answer 4

• Your actions have a negative effect on someone else. E.g., pollution.

Question 5

Positive externality

Answer 5

• Your actions have a positive effect on someone else, e.g., education.

Question 6

Climate Sensitivity

Answer 6

• Uncertainty around effects of carbon dioxide on temperature increase

Question 7

Climate Mitigation

Answer 7

• How do we value the well-being of future generations?

Question 8

The Rule of 70

Answer 8

of years required to double = 70/annual percentage growth rate