Economics - Technology & Innovation (Section 4) Flashcards
In 1820, what was the income of 90% of the world?
> $1.90 per day
In European countries in 1500, what percentage of the workforce were farmers?
50-75%
In the United States as far as the late 1800’s, what percentage of the workforce were farmers?
46%
What percentage of the same workforce were working blue collar jobs?
34%
What jobs did the last 16% of people work?
8% worked domestic service, the other 8% worked in jobs that required creativity, such as being a manager
TRUE OR FALSE: People retired early on in life.
FALSE; people often never retired, working until they were physically unable or until they died.
What are the three themes of the standard of living?
- Material hardship (i.e. work, home, food, possessions) 2. Isolation 3. Disease and disaster
What was burned to heat the stove?
Wood, coal, peat, turf, or animal dung
What could be damaged by the smoke of the fires made by these fuels?
Eyes and lungs
What were candles typically made of, making them so expensive?
Animal fat
How were foods preserved preindustrial era?
drying, salting, smoking, pickling, or turning into preserves
How much did a clock cost in 1800?
$50
What is today’s equivalent of $50 in 1800’s dollars?
Today, the equivalent is $1,000
Who could have afforded a clock?
2% of wealthy white adults.
What were the main ways information spread?
Horses or ships
Why was everything so localized?
Travel was uncomfortable and slow, keeping people in their own limited social circles.
What percentage of the world population was literate in 1800?
12%
What were the main types of infectious diseases?
plague, smallpox, malaria, tuberculosis, cholera, polio, etc.
TRUE OR FALSE: Disease only affected the poor.
FALSE; Disease went for the wealthy and the poor, mainly due to poor hygiene
Who were particularly susceptible to passing from disease?
Children, a quarter dying in their first year and half dying before reaching young adulthood
About how much of the population in Europe did the Black Plague kill?
Half (1/2) to One-third (1/3)
Who coined the term “Great Enrichment”?
The improvements in living standards over the last couple centuries are so dramatic that economic historian Deirdre McCloskey has termed this transformation “the Great Enrichment.”
For what country’s navy was the set of machines for pulley blocks created for?
A set of machines was created for the British navy to manufacture pulley blocks
What were the advantages of thread-spinning machines?
For instance, some of the first thread-spinning machines not only saved human spinning labor, but were also able to spin very fine thread, which was used for the highest quality fabrics.
How was the process for making steel in the 1800s?
Through the early 1800s, the only processes to make steel were labor-intensive, taking weeks of heating in special ovens or crucibles.
Who dicovered a way to make steel faster?
English inventor Henry Bessemer (1813−98) discovered a way to make steel by blasting the molten metal with air—reducing the process to about twenty minutes.
How did the method by Henry Bessemer to make steel work?
English inventor Henry Bessemer (1813−98) discovered a way to make steel by blasting the molten metal with air.
What is cement’s main ingredient?
Its main ingredient is crushed limestone.
What is the chemical result of burning crushed limestone at high temperatures?
Crushed limestone is kilned at high temperatures to transform it from calcium carbonate (CaCO3) to calcium oxide (CaO).
What can be mix in with cement to improve it?
Cement can be improved by mixing in silicates, such as clay or volcanic ash.
How do silicates improve cement when they are mix with it?
They can make the material harder or allow it to set underwater.
What is the first phase of technology-driven economic growth known as?
the first Industrial Revolution
Where did the first Industrial Revolution begin?
Britain in the mid-1700s
What were some major inventions of the first Industrial Revolution?
steam engines, textile machinery, horse-drawn agricultural machinery, and the locomotive (most were mechanical devices)
The second Industrial Revolution was influenced by?
advancements in science that was the foundation for technological breakthroughs
When did industrial leadership shift to the United States from Britain?
during the second Industrial Revolution and especially after the World Wars
What is referred to as the “third Industrial Revolution”?
the technological progress with digital technologies: computers and the internet
How do economists define technology?
a technology is a way of transforming one set of inputs into outputs
What are the two types of technological progress?
process and product innovation
What does process innovations consist of?
the discovery of new and more efficient ways to transform inputs into outputs
Who discovered a way to make steel that required less intense human labor (an example of process innovations)?
Henry Bessemer
What are product innovations?
are discoveries of ways to transform inputs into entirely new outputs
What’s an example of product innovation (used in the packet)?
the creation of new synthetic materials like plastic
What is the definition of labor productivity?
the amount of output produced per worker or per worker-hour
What is required to increase for there to be an increase in per capita income?
labor productivity
What can cause an increase in labor productivity?
capital equipment and an increase in the quality of the product which typically happens with time
True or False? Capital investment is the only thing needed for the Great Enrichment.
False
Who developed a model of economic growth that shed light on the drivers of labor productivity?
Robert Solow
What was Robert Solow’s formula for economic output called?
production function
Solow’s production function is in the form?
Y = AK^1/3 * L^2/3
What does Y stand for in Solow’s product function formula?
total economic output or GDP
What does K and L stand for in Solow’s product function formula?
capital and labor, respectively
What is A Solow’s product function formula?
it is a multiplier representing technical factors (i.e. new inventions or processes, or better ways of organizing factories)
Today what is the A from Solow’s product function formula known as?
total factor productivity or TFP
What does Solow’s model indicate?
that if you doubled all the people and machines used to produce GDP, GDP would also double
Using Solow’s product function formula, if we want to increase income what needs to be increased instead of how much is produced in total?
how much each worker produces
To increase how much each worker produces to increase income using Solow’s formula, by adding capital what is the result if the number of workers is fixed?
there is an increase in worker productivity but the diminishing returns to productivity impose limits on this process. GDP will increase but less and less each time
True or False? Capital accumulation cannot sustain long term increases in per-capita income (a conclusion of Solow’s model)
True
Sustained increases in capital accumulation and labor productivity are the results of sustained increases in?
total factor productivity or TFP
What does total factor productivity capture?
differences in technology
According to Solow’s findings, improvements in technical factors drive what?
sustained growth (which is not driven by capital accumulation)
Who coined the term “creative destruction”?
Joseph Schumpter
What does creative destruction mean?
technological progress can be bad for old industries that produce technologies that are rendered obsolete by progress, even if it is typically good for society as a whole
What is technological unemployment?
the fear that automation might lead to rising unemployment
True or False? There has been a rise in unemployment as a consequence of technological progress
False
What percentage of annual GDP is directly contributed to by technological progress?
1%
What’s the most important reason for differences in GDP per capita according to Solow’s work?
differences in technology
What percentage of GDP is classified as spending on research and development (R&D) in the U.S.?
2.50%
What country is the largest R&D funder?
the United States (accounts for 27% of global R&D)
How much percent of global R&D do China and Europe each fund?
22%
Where does R&D funding come from?
private industry, the government, and non-profit organization
Private industry is the source of what percentage of the total R&D spending in the U.S.?
73%
Federal government is the source of what percentage of the total R&D spending in the U.S.?
20%
Non-profit foundations, state governments, and universities are the source of what percentage of the total R&D spending in the U.S.?
7%
