Topic 3: A Production Model of GDP Flashcards
1
Q
Total Factor Productivity
TFP or A
A
A expresses any improvements in technology or economic condition that allows capital and labor to be utilized more effectively
Expresses how well labor and capital are utilized
examples:
- geography - climate, land/soil, health, coastal access, natural resources
- institution - civil liberties, social capital, openness to trade, education
- other - state of tech, infrastructure, terms of trade, history
2
Q
Property 1
A
CONSTANT RETURNS TO SCALE
“repetition property”
3
Q
Property 2
A
XX
4
Q
Property 3
A
XXX
5
Q
Property 4
A
XXX
6
Q
Property 5
A
XXX
7
Q
Marginal Product of Capital
MPk
A
XXX
8
Q
Marginal Product of Labor
MPn
A
XXX
