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)