Growth: history of thought

Question 1

economic theory

Answer 1

mathematically rigorous way of telling a story

Question 2

how had quality of life increased until 1800s

Answer 2

marginally

Question 3

what did malthus set out to find

Answer 3

explanation for apparent lack of economic growth

Question 4

three assumptions of malthus model

Answer 4

1. aside from labor, the main factor of production is land
2. everything that is produced is consumed
3. higher levels of consumption lead to increased fertility

Question 5

goods that are not consumed =

Answer 5

capital in use

Question 6

implication of malthus model

Answer 6

since finite resource must be shared among a country’s population having more people is bad

Question 7

what was the malthusian trap

Answer 7

with increase in population output decreases because land decreases

Question 8

what was solow aware of that nalthus was not

Answer 8

aware of the extraordinary period of growth that followed industrial revolution

Question 9

solow’s world view

Answer 9

capital centric worldview

Question 10

four assumptions of solow model

Answer 10

1. aside from labor the main factors of production of capital and tech
2. each period country must choose what fraction of output to consume and what fraction of output to save in form of capital investment
3. higher levels of savings lead to faster growth in capital stock
4. tech improves each period

Question 11

solow thinks that tech advancement ____ lead to sustained improvements in quality of life

Answer 11

does

Question 12

what is the key difference between land and capital

Answer 12

land is finite but capital amount is not fixed

Question 13

where does technology come from

Answer 13

universities, private sectors (for profit) and government

Question 14

what is romer’s worldview

Answer 14

technology centric worldview

Question 15

three assumptions of romer model

Answer 15

1. aside from labor, the main factors of prod. are capital and tech
2. each period a country must choose what fraction of its labor force to dedicate to producing physical output vs new tech
3. higher levels of R&D lead to faster tech advancement

Question 16

result of romer model

Answer 16

high population = faster tech advancement, which allows for faster capital accumulation and increased per capita output and consumption

Question 17

implication of romer model

Answer 17

despite the fact that finite resources must be shared among a larger population may be good for everyone quality of life

Question 18

summarize malthus assumption/result

Answer 18

-higher consumption leads to higher population growth
-tech advancement does not sustainably improve people’s QOF

Question 19

summarize solow assumotion/result

Answer 19

-factors can be used to produce consumption or investment goods
-capital accumulation and tech advancement jointly imply sustained economic growth

Question 20

summarize romer assumption/result

Answer 20

-factors can be used to produce consumption/investment goods or new tech
-not only does population growth not constrain QOF but it actually serves as the main engine of growth (via tech advancement)

Question 21

solow graph

Answer 21

(+) indirect feedback loop

Question 22

romer consumption path graph

Answer 22

essentially grow forver

Question 23

two types of growth

Answer 23

extensive and intesive

Question 24

extensive

Answer 24

factor driven growth via increased use of capital and/or labor

Question 25

intensive

Answer 25

tech driven growth via increased efficiency of our use of capital and/or labor