chp 9
what leads to lower productivity because of a lack of incentives
government subsidies
what will not increase labor productivity
growth in the population
increases in total factor productivity are NOT crucial for growth (T/F)
false
Rising high school graduation rates are an example of an increase in
human captial
physical capital
human-made resources such as buildings and machines
aggregate production function
hypothetical function that shows how real gdp per worker depends on the quantities of physical capital per worker and human capital per worker, as well as the state of technology gdp per worker = T (physical capital per worker) ^x (human capital per worker)^x
how can diminishing returns disappear?
if we increase the amount of human capital per workers or improve technology or both, as the amount of physical capital per worker is increased
infrastrucutre
roads, power lines, ports, information networks, and other underpinnings for economic activity
research and development
spending to create and implement new technologies
for growth accounting when total factor productivity increases
the economy can produce more output with the sam quantity of physical capital, human capital, and labor
human capital
the improvement in labor created by education and knowledge embodied in the workforce
If real GDP doubles in 35 years, its average annual growth rate is approximately:
2%
Suppose a panel of economists predicts that a nation's real GDP per capita will double in approximately 20 years. Based upon the rule of 70, what must be the predicted annual growth rate of real GDP per capita?
3.5%
diminishing returns to physical capital
holding the amount of human capital per worker and the state of technology fixed, each successive increase in the amount of physical capital per worker leader to a smaller increase in productivity
china has much higher rate of growth than the US but the average chinese household is
still far poorer than a typical U.S. household, because China's real GDP per capita is much lower than that of the United States
total factor productivity
the amount of output that can be produced with a given amount of factor inputs
physical capital includes
tools a worker has to work with
Investment in human capital shifts the aggregate production function:
upward
If a country has a population of 1,000, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is:
$5,000
role of government in promoting economic growth
-government policies -protection of property rights -political stability and good governance
role of government in government policies
-government subsidies to infrastructure -government subsidies to education -government subsides to research and development -maintaing a well-functioning financial system
very good basic education has permitted
-rapid improvement in human capital -substantial technological progress
why growth rates differ
-savings and investment spending -education -research and development
rule of 70
-small differences in growth rate get magnified over time -small improvements in growth add up fast doubling time for x = 70/ growth rate
human capital means
A. improvement in a worker's skills made possible by education, training and knowledge
very high savings rate
allow businesses to borrow and add more physical capital per worker
technological process
an advance in technology means of production in goods and services
Economists use real GDP per capita to measure economic growth
because it represents the inflation-adjusted value of a country's production of goods and services corrected for the effects of changes in a country's population.
one with the fastest growth rate of real GDP per capita between 1980 and 2010 was:
china
aggregate production function exhibits
diminishing returns to physical capital
growth accounting
estimates of the contribution of each major factor in the aggregate production function to economic growth
convergence hypothesis
international differences in real GDP per capita tend to narrow over time
what is a countries would NOT be characterized by abundant farmland and mineral deposits?
japan
sustainable long run economic growth
long-run growth that can continue in the face of the limited supply of natural resources and the impact of growth on the environment
Economists generally agree that ____ are the best way for governments to reduce greenhouse gases to address climate change.
market-based inventives
the convergence hypothesis is
not wrong, but education, infrastructure, and the rule of law are not equal among nations.
The main reason sub-Saharan Africa is so poor is because:
of political instability and civil wars
Since the 1960s, nations like South Korea have been a part of the so-called East Asian economic miracle because:
of the combination of rapid technological progress, high savings rates, and rapid improvement in human capital
labor productivity
output per worker -simply referred to as productivity
productivity declines when
population growth exceeds real GDP growth
technological progress is advanced through
research and development
increases in total factor productivity likely measure the economic effects of technological progress
therefore technological change is crucial for economic growth