Macro CH. 12
When a society decides to increase its quantity of physical capital, the society
is in effect deciding to consume fewer good and services in the present
What increases productivity?
1: an increase in the physical capital stock per worker 2: an increase in human capital per worker an increase in natural resources per worker
If an American based firm opens and operates a new watch factory in Panama, then it is engaging in
Foreign direct investment
In the 1800s, Europeans purchased stock in American companies that used the fund to build railroads and factories, The European who did this engaged in
Foreign portfolio investment
What is considered a physical capital and what isn't?
IS 1: a new factory building 2: a computer used to help Mercury Delivery Service keep track of its orders 3: a desk used in an accountant's office NOT 1: on the job training
The equipment and structures available to produce goods and services are
Physical capital
the following is human capital
Understanding how to use a company's accounting software
If there are diminishing returns to capital, then
increases in the capital stock increase output by ever smaller amounts.
Other things equal, relatively poor countries tend to grow
faster than relatively rich countries, this is called the catch up effect
In determining living standards, productivity plays a key role
for both nations and individuals
Despite its status as one of the richest countries in the world, Japan
has few natural resources
Human capital is
knowledge and skills that workers acquire through education, training, and experience
All else equal, if there are diminishing returns then if a country raised its capital by 100 units last year and by 100 units this year
slower than relatively rich countries, this is called the fall-behind effect