ECON2101 Ch. 17

Outward-oriented policies:

-allow countries to take advantage of gains from trade -have generally led to high growth for the countries that pursued them -receive widespread support from economists

Educated people may generate ideas that increase production. These ideas:

-produce a return to society from education that is greater than the return to the individual -could justify government subsidies for education -are external benefits to education

In order to promote growth in living standards, policymakers must:

-protect property rights -maintain political stability -encourage the accumulation of factors of production

When a society decides to increase its quantity of physical capital, the society...

... is in effect deciding to consume fewer goods and services in the present

After adjusting for inflation, over time the prices of most natural resources have been...

... steady or falling, meaning that our ability to conserve them is growing more rapidly than their supplies are dwindling

Over extended periods of time, population growth...

...has uncertain effects on the standard of living

In the long run, a higher saving rate...

...increases the level of productivity

In US, each additional year of schooling has historically raised a person's wage on average by amount how much?

10% In less developed countries, the gap between wages of educated and uneducated workers is larger.

Average US growth over the last 100 years

About 2%

World Bank

An organization that tries to encourage the flow of investment to poor countries

Technology

An understanding of the best ways to produce goods and services

From 1900 to 2014, this country experienced the highest average annual growth rate of real GDP per person

Brazil

Which countries' growth rates of real GDP per person have exceeded the US's over the last century?

Canada and China

Measured in 2014 dollars, real GDP per person in the US in 2014 was about 10 times that in what country?

India

Which country had the highest growth rate over the past 100 years?

Japan (out of Japan, China, Germany, United States)

Human capital

Knowledge and skills that workers acquire through education, training, and experience

Proprietary technology

Known only by the company that discovered it

If a country increases its saving rate, does productivity or real GDP per person permanently grow at a higher rate?

NOPE

diminishing returns

Real GDP in poor countries should grown at a faster rate than in rich countries (other things the same) when a country increases its capital by one unit, its output increases but by less than when the previous unit was added

production function

Y = A F (L,K,H,N) Many production functions have a property called constant returns to scale (doubling all inputs causes the amount of output to double as well) If constant returns to scale, can write: Y/L = A F(1, K/L, H/L, N/L)