Growth Facts, Income and Growth Accounting

Question 1

What is another term for GDP per capita

Answer 1

Income per captia

Question 2

What is the PPP adjustment

Answer 2

The PPP (Purchasing Power Parity) measures the relative living standards between two countries adjusting for the fact that prices are not equal at current exchange rates.

Question 3

What does the Aggregate Production Function tell us

Answer 3

How exactly do increases in a factor of production lead to an increases in productivity and GDP

Question 4

What is the aggregate production function

Answer 4

Y = A x F(K,H)

Question 5

What does more advanced technology do to the production function

Answer 5

Shifts the curve up, as more output can be produced with the same amount of physical capital and total efficiency units of labor

Question 6

How can a nation increase its GDP

Answer 6

Increasing its physical capital stock, K
Increasing the total efficiency units of labour, H
Improving its technology, A