Production & Growth (Block 2)

Question 1

Standard of living varies across countries due to productivity differences across countries

Answer 1

The standard of living refers to the level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographical area.

Question 2

Explanation

Answer 2

Productivity differences, which can be attributed to factors like technology, education, infrastructure, and institutions, lead to variations in the standard of living between countries.

Question 3

Y/L is the key determinant of productivity which depends on physical capital per worker, human capital per worker, and so on

Answer 3

Y/L (output per worker) represents productivity, which is influenced by factors such as physical capital (machinery, equipment), human capital (education, skills), and technological advancements.

Question 4

Relation between productivity, real GDP per capita, standard of living, economic policies

Answer 4

Higher productivity leads to higher real GDP per capita and, consequently, an improved standard of living. Economic policies that promote investments in physical and human capital, innovation, and efficiency can enhance productivity.

Question 5

Calculating productivity, real GDP per person, growth rate of real GDP per person

Answer 5

• Productivity: Output per worker (Y/L).
• Real GDP per person: Real GDP divided by the population.
• Growth rate of real GDP per person: Percentage change in real GDP per person over time.

Question 6

Economic policies to enhance productivity

Answer 6

Examples: Policies promoting education and skill development, infrastructure investment, technological innovation, research and development funding.