economic growth quiz Flashcards
real GDP per capita
best measure of a nation’s standard of living
why do some countries have more growth than others
economic system
rule of law
capital stock
human capital
natural resources
economic system
capitalism promotes innovation and provides incentives to improve productivity
rule of law
countries with solid institutions and political stability have historically had more economic growth
capital stock
countries that have more machines and tools are more productive
human capital
countries that have better education and training are more productive
natural resources
countries that have more access to natural resources are more productive
rule of 70
number of years for variable to double
70/annual growth rate of variable
physical capital
tools, machinery, factories, infrasturcuture
the product of investment
conditions for growth
willingness to sacrifice current consumptions in order to grow
savings
trade
technology and productivity
research and development
more technology increases productivity
More productivity=economic growth
government and physical capital
provide infrastructure
building roads, airports, electrical grids
private firms also invest in physical capital
maintain infrastructure
supply side policies
government and human capital
pay for the vast share of primary and secondary education
capital stock
investing in a business = machinery and tools will increase
it increases AS, AD, LRAS in long run
hindrances to growth (slows down growth)
economic and political instability (high inflation expectations)
lack of savings
excess current consumptions
failure to maintain existing capital
crowding out of investment
trade barriers
government and technology
private companies do research and development
government gives subsides to pay for this research
political stability, property rights, and excessive government intervention
changes in government cause investments to decrease
investors like stability
what government policies most likely result in long run economic growth
education
infrastructure spending
production/investment incentive programs (investment tax credits)
long run economic growth
sustained rise in the production of goods and services
short run economic growth
the results of Buisness cycle
investment increase (in long run)
capital stock increase
all three curves increase
aggregate production function
increase of input increases output (not at a constant rate
productivity levels off because of diminishing returns
capital that creates economic growth
human capital
physical capital
technology
productivity
output per unit of input
