Module 2: Growth and Productivity

Question 1

the 2 things needed to achieve economic growth?

Answer 1

increase in quantity and quality of capital and labor

Question 2

how to calculate productivity improvements?

Answer 2

n° ot hours of work required to purchase the G&S we consume

Question 3

what could cause productivity slowdown?

Answer 3

investment decrease, structural changes (tastes or technology), incentive effects…

Question 4

how do we measure productivity?

Answer 4

output per hour worked, not per worker

Question 5

what is creative destruction? and aka

Answer 5

churn. Is the mutation of firm and market as old industries died and replaced by new ones

Question 6

what increases standard of living?

Answer 6

productivity increases

Question 7

what is the golden rule savings rate?

Answer 7

perfect balance between present and future consumption

Question 8

what is private saving?

Answer 8

part of disposable income not spent on consumption

Question 9

what is national saving?

Answer 9

private saving + public saving (national income not spent)

Question 10

national saving formula?

Answer 10

private saving - gov’t deficit

Question 11

private investment formula?

Answer 11

national saving - foreign financing

Question 12

how to create long-term growth?

Answer 12

productivity improvements. Gov’t spending in education and infraestructure creates confidenfe in world lenders = + loans