Krugman Textbook Chapter 9 Flashcards
Rule of 70
A mathematical formula that states that the time it takes real GDP per capita, or any other variable that grows gradually over time, to double is approximately 70 divided by the other variables annual growth rate.
Labour Productivity/ Average Productivity of Labour (APL)/ Productivity
Output per worker. Increases in labour productivity are the only source of long run economic growth.
Physical Capital
Manufactured resources, such as buildings and machines.
Human Capital
The improvement in labour created by the education and knowledge learned in the work force.
Technological Progress
An advance in the technical means of production of goods and services.
Aggregate Production Function
A relationship that shows how the aggregate real quantity of output is produced using the available factors of production.
Total Factor Productivity
A term that accounts for output that is not a result of the productive inputs.
Positive Marginal Productivity of Physical Capital Positive (MPK)
The amount of increased productivity caused by a small increase in used physical capital.
Per Worker Production Function
A hypothetical function that shows how productivity (real GDP per worker) depends on the quantities of physical and human capital per worker, as well as the level of technology available.
Diminishing Returns to Physical Capital/ Diminishing Marginal Productivity of (Physical) Capital (dim MPK)
In an aggregate production function when the amount of human capital per worker and the state of technology are held fixed, each successive increase in the amount of physical capital per worker leads to a smaller increase in productivity.
Growth Accounting
Accounting that estimates the contribution of each major factor in the per worker production function to economic growth.
Research and Development
Spending to create new technologies and prepare them for practical use.
Infrastructure
Physical capital, such as roads or power lines, that provides a foundation for economic activity.
Convergence Hypothesis
A principle of economic growth that holds that international differences in real GDP per capita tend to narrow over time because countries that start with lower real GDP per capita tend to have higher growth rates.
Sustained Long-Run Economic Growth
Long-run growth that can continue in the face of the limited supply of natural resources and the impact of growth on the environment.
