chp 9

what leads to lower productivity because of a lack of incentives

government subsidies

what will not increase labor productivity

growth in the population

increases in total factor productivity are NOT crucial for growth (T/F)

false

Rising high school graduation rates are an example of an increase in

human captial

physical capital

human-made resources such as buildings and machines

aggregate production function

hypothetical function that shows how real gdp per worker depends on the quantities of physical capital per worker and human capital per worker, as well as the state of technology gdp per worker = T (physical capital per worker) ^x (human capital per worker)^x

how can diminishing returns disappear?

if we increase the amount of human capital per workers or improve technology or both, as the amount of physical capital per worker is increased

infrastrucutre

roads, power lines, ports, information networks, and other underpinnings for economic activity

research and development

spending to create and implement new technologies

for growth accounting when total factor productivity increases

the economy can produce more output with the sam quantity of physical capital, human capital, and labor

human capital

the improvement in labor created by education and knowledge embodied in the workforce

If real GDP doubles in 35 years, its average annual growth rate is approximately:

2%

Suppose a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. Based upon the rule of 70, what must be the predicted annual growth rate of real GDP per capita?

3.5%

diminishing returns to physical capital

holding the amount of human capital per worker and the state of technology fixed, each successive increase in the amount of physical capital per worker leader to a smaller increase in productivity

china has much higher rate of growth than the US but the average chinese household is

still far poorer than a typical U.S. household, because China's real GDP per capita is much lower than that of the United States

total factor productivity

the amount of output that can be produced with a given amount of factor inputs

physical capital includes

tools a worker has to work with

Investment in human capital shifts the aggregate production function:

upward

If a country has a population of 1,000, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is:

$5,000

role of government in promoting economic growth

-government policies -protection of property rights -political stability and good governance

role of government in government policies

-government subsidies to infrastructure -government subsidies to education -government subsides to research and development -maintaing a well-functioning financial system

very good basic education has permitted

-rapid improvement in human capital -substantial technological progress

why growth rates differ

-savings and investment spending -education -research and development

rule of 70

-small differences in growth rate get magnified over time -small improvements in growth add up fast doubling time for x = 70/ growth rate

human capital means

A. improvement in a worker's skills made possible by education, training and knowledge

very high savings rate

allow businesses to borrow and add more physical capital per worker

technological process

an advance in technology means of production in goods and services

Economists use real GDP per capita to measure economic growth

because it represents the inflation-adjusted value of a country's production of goods and services corrected for the effects of changes in a country's population.

one with the fastest growth rate of real GDP per capita between 1980 and 2010 was:

china

aggregate production function exhibits

diminishing returns to physical capital

growth accounting

estimates of the contribution of each major factor in the aggregate production function to economic growth

convergence hypothesis

international differences in real GDP per capita tend to narrow over time

what is a countries would NOT be characterized by abundant farmland and mineral deposits?

japan

sustainable 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

Economists generally agree that ____ are the best way for governments to reduce greenhouse gases to address climate change.

market-based inventives

the convergence hypothesis is

not wrong, but education, infrastructure, and the rule of law are not equal among nations.

The main reason sub-Saharan Africa is so poor is because:

of political instability and civil wars

Since the 1960s, nations like South Korea have been a part of the so-called East Asian economic miracle because:

of the combination of rapid technological progress, high savings rates, and rapid improvement in human capital

labor productivity

output per worker -simply referred to as productivity

productivity declines when

population growth exceeds real GDP growth

technological progress is advanced through

research and development

increases in total factor productivity likely measure the economic effects of technological progress

therefore technological change is crucial for economic growth