Chapter 3: Long-Run Economic Growth

Question 1

the Great Divergence

Answer 1

a phenomenon: In the past three centuries, standards of living have diverged dramatically

Question 2

growth rate

Answer 2

a growth rate in some variable y is the percentage change in that variable.

Question 3

Rule of 70

Answer 3

if yt grows at a rate of g percent per year, then the number of years it takes yt to double is approximately equal to 70/g.

Question 4

two points to note about the Rule of 70

Answer 4

1. very informative in its own right
2. the time it takes for income to double depends only on the growth rate, not on the current level of income.

Question 5

ratio scale

Answer 5

a plot where equally spaced tick marks on the vertical axis are labeled consecutively with numbers that exhibit a constant ratio

Question 6

convergence

Answer 6

When countries with lower levels of GDP per capita catch up to countries with higher levels of GDP per capita