Chapter 8 Flashcards
Cutting-Edge Growth
growth to new ideas
Catch-Up Growth
growth due to capital accumulation
Marginal Capital
increase in output caused by additional of one more unit of capital
Steady-state level of capital
when the capital when the steady-state of capital is neither increasing or decreasing
Diminishing returns
eventually output and capital will stop growing
Patents
new processes products and methods can be copied by competitors
Non-rivalrous
when one person’s consumption of goods does not limit another person’s consumption
The solow model tells us
Countries that devote a larger share of output to investment will be wealthier
-Growth will be faster the further away a countries capital stock is from its steady-state
-Capital accumulation cannot explain long-run economic growth
