macro ch 7

on-the-job training

skills that workers acquire while at work rather than in school or in the formal vocational training programs

Identify the main reason to expect convergence in the long run.

Low-productivity countries learning from high-productivity countries

What makes up technological change?

capital education research & development

Human capital differs from physical capital in that

human capital is intangible.

What is capital a result of?

its the result of past decisions to make investments in these items

property rights

laws and or conventions that assign owners the rights to use their property as they see fit within the law

Compared to workers in richer countries, workers in developing countries have

lower productivity and lower wages.

cost disease of the personal services

service activities that require direct personal contact tend to rise in price relative to other goods and services

The definition of human capital refers to

worker education and worker training.

What helps in developmental assistance?

world bank IMF multinational corporations foreign direct investments

What are the 3 pillars of growth?

1) capital (physical) 2) technology 3) labor quality- education/training (human capital)

Which of the following is an explanation for why some poor countries suffer from lower productivity growth?

Poor countries have lower capital stocks.

What determines the productivity growth rates of a country?

Rates of increase of capital, technology, and workforce quality

capital

a nations available supply of plant, equipment, and software

invention

act of discovering new products or new ways of making products

innovation

act of putting new ideas into effect, like bringing new products to market, changing product designs, and improving the way in which things are done

human capital

amount of skill embodied in the workforce

Which of the following would tend to shift the production function upward?

an increase in the level of technology.

The shrinking gap between the income levels of poor and rich countries is known as the

convergence hypothesis.

In general, as productivity levels increase, the potential for productivity growth

decreases.

growth rate of productivity

depends on rate of increase in physical/human capital and technology

A productivity decrease would be illustrated by a shift in the production function

downward.

investment

flow of resources into the production of new capital. the labor, steel, and other inputs devoted to the construction of factories, warehouses, railroads, and other pieces of capital during some period of time

What is the nickname for development assistance

foreign aid

multinational corporations

generally large corporations that do business in many countries

Which of the following are problems that may limit economic growth in developing countries?

geography, health, & governance.

convergence hypothesis

holds that nations with low levels of productivity tend to have high productivity growth rates, so that international productivity differences shrink over time

Where are most multinational corporations' head quarters located?

in developed countries

What is capital formation synonymous with?

investment

How can capital grow?

investment government

The phrase "capital formation" is synonymous with

investment spending.

capital formation

process of building up the capital stock

More education and training usually lead to higher levels of

productivity.

Laws that assign owners the rights to use assets as they see fit are called

property rights.

foreign direct investment

purchase or reconstruction of real business assets- such as factories, offices, or machinery- in a foreign country

Which of the following is not one of the three pillars of productivity growth?

rate of capacity utilization.

How can government grow capital?

real rate of interest taxation (provisions) changes in technology growth in demand political stability/property rights

research and development (R&D)

refers to the activities aimed at inventing new products or processes, or improving new ones

development assistance

refers to the outright grants and low-interest loans to poor countries from both rich countries and multinational institutions like the world bank

What is an example of property rights?

to sell the property or rent it out, or dividends while they own it

What is the purpose of development assistance?

to spur economic development