Chapter 2

Question 1

diminishing marginal product

Answer 1

an economic principle that states that output will decrease as more of a variable input is used

Question 2

Growth Accounting Equation

Answer 2

GDP Growth = Capital Growth + Labor Growth + Technological Progress

Question 3

Fundamental sources of growth

Answer 3

1. market growth
2. science and culture
3. institutions
4. geography

Question 4

Economic growth

Answer 4

refers to the increase in average standards of living in a country over a sustained period

commonly measured as the growth rate of real GDP per capita

Question 5

Nominal GDP

Answer 5

a measure of the value of all final goods and service newly produced in a country during a given time period.

Question 6

Real GDP

Answer 6

measures changes in the quantities of goods and services produced, holding prices constant.

Question 7

ways to measure nominal gdp

Answer 7

1.production approach
2.expenditure approach
3.income approach

Question 8

Anthropometric history

Answer 8

focuses on human heights as a measure of average standards if living

Question 9

labor productivity

Answer 9

defined as the amount of real gdp produced per hour of work

Question 10

Factors of Production

Answer 10

labor (L)
physical capital (K)
human capital (H)
natural capital (N)

A, called total factor productivity