econ chapter 25
Nonrenewable resource
a resource that cannot be replaced (oil)
Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of productivity
more in the short run than in the long run
brain drain
the loss of highly educated and skilled workers to other countries
Growth rate percent per year ___
ignores short-run fluctuations and represents an average rate of growth for real income per person over many years
Technological knowledge refers to
society's understanding about how the world works -quality of society's textbooks
the catch-up effect
the property whereby countries that start of poor tend to grow more rapidly than countries that start off rich
productivity
the quantity of goods and services produced from each unit of labor input
Each year of school has historically raised a person's wage by
10 percent
Renewable resource
A natural resource that can be replaced at the same rate at which the resource is consumed (trees)
World Bank
International organization which obtains funds from world's advance countries and uses these resources to make loans to less developed countries.
foreign direct investment
Investment made by a foreign company in the economy of another country.
factors of production
The inputs used to produce goods and services - labor, land, and capital
the following can be measured by the level of real GDP per person
The standard of living but not productivity
Natural resources are not necessary for __
an economy to be highly productive in producing goods and services ex: Japan - imports many natural resources and exports manufactured goods
When the economy has a high level of capital
an extra unit of capital leads to a small increase in output
Foreign invest raises the GNP __
by less than it raises the production of GDP - if ford opens a factory in Mexico, some of the income accrues to people who don't live in Mexico
Accurately describe the catch up effect
in one generation, china will be one of the rich countries in the world, if Chinas GDP per person continues to grow 9% per year
GDP measures
income and expenditures
Suppose Japanese-based Toshiba Corporation builds and operates a new computer factory in the United States. Future production from such an investment will
increase U.S. GDP more than it increases U.S. GNP.
In the long run, the higher saving rate
increases the level of productivity but not to higher growth in these variables
outward-oriented policies
international trade in goods and services can improve the economic well-being of a country's citizens - best for poor countries to pursue
For society to invest more in capital...
it must consume less and save more of its current income
Even though Japan had a higher growth rate of real GDP per person than the United States over the last 120 years
japan real level of gdp < real level gdp us
Economists differ in their views of the role of the government in promoting economic growth. At the very least, the government should
lend support to the invisible hand by maintaining property rights and political stability
Educational attainment tends to be
low in countries with high population growth
Economist Robert Fogel focused on which of the following factors as one determinant of long-run economic growth?
nutrition
The one variable that stands out as the most significant explanation of large variations in living standards around the world is
productivity
If over a short time there is an increase in the number of people retired and a decrease in the number of people working, then productivity
rises but real per person GDP falls
technological knowledge
society's understanding of the best ways to produce goods and services
An understanding of the best ways to produce goods and services is called
technology
Growth in productivity is ___
the key determinant of growth in living standards
diminishing returns / diminishing marginal product of capital
the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases
Human capital refers to
the resources expended transmitting this understanding to the labor force -amount of time the population reads textbooks
Human capital
the skills and knowledge gained by a worker through education, training, and experience
Physical capital (captial)
the stock of equipment and structures that are used to produce goods and services
From 1960 to 1990, in which of the following countries has investment resulted in economic growth sufficiently higher than that in the United States?
South Korea
when the economy has a low level of capital
an extra unit of capital leads to a large increase in output
foreign portfolio investment
an investment that is financed with foreign money but operated by domestic residents (Mexico building a new factory with profits from shares)
inward-oriented policies
attempt to increase productivity and living standards within the country by avoiding interaction with the rest of the world
patent
gives company temporary right to be exclusive manufacturer of certain product
capital and human capital are
produced factors of production
Natural resources
the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits