Chapter 20: Vocabulary

Question 1

Capital Deepening

Answer 1

An increase by society in the average level of physical and/or human capital per person

Question 2

Compound Growth Rate

Answer 2

The rate of growth when multiplied by a base that includes past GDP growth

Question 3

Convergence

Answer 3

Pattern in which economies with low per capita incomes grow faster than economies with high per capita incomes

Question 4

Human Capital

Answer 4

The accumulated skills and education of workers

Question 5

Industrial Revolution

Answer 5

The widespread use of power-driven machinery and the economic and social changes that occurred in the first half of the 1800s

Question 6

Infrastructure

Answer 6

A component of physical capital such as roads and rail systems

Question 7

Innovation

Answer 7

Putting advances in knowledge to use in a new product or service

Question 8

Invention

Answer 8

Advances in knowledge

Question 9

Labor productivity

Answer 9

The value of what is produced per worker, or per hour worked (sometimes called worker productivity)

Question 10

Physical Capital

Answer 10

The plant and equipment that firms use in production; this includes infrastructure

Question 11

Production Function

Answer 11

The process whereby a firm turns economic inputs like labor, machinery, and raw materials into outputs like goods and services that consumers use

Question 12

Rule of Law

Answer 12

The process of enacting laws that protect individual and entity rights to use their property as they see fit. Laws must be clear, public, fair, and enforced, and applicable to all members of society

Question 13

Technology

Answer 13

all the ways in which existing inputs produce more or higher quality, as well as different and altogether new products