Growth/Productivity Flashcards
(18 cards)
What approach is more likely to give you a more accurate picture of living standards in a country
Converting both values to US dollars and using the PPP-Adjusted exchange rate
Productivity
The value of the output that a worker generates for each hour of work
Productivity varies across countries because
-Level of tech differs
-Human capital per worker varies substantially from country to country
-Quantity of physical capital that workers can access varies across countries
Factors of Production
Inputs used to produce other goods and services in an economy
Aggregate production function describes the relationship between
The aggregate GDP of a nation and its factors of production
Total efficiency units of labor
The product of the total number of workers and the average human capital of each worker
Increasing the average workers level of human capital will
Increase the total efficiency units of labor in an economy(All else equal)
Human capital
The skill each worker has to produce stuff
Physical Capital
The amount of machines and buildings used for production
Technology
The devices and practices that determine how efficiently an economy uses its labor and capital
(APF given) GDP will increase if
The measurement of technology increases the efficiency units of labor and physical capital stock of the country remain constant
How do increases in tech affect APF
Increases in tech cause APF to shift up, which shows more output is produced from the same amount of inputs
Does limiting international competition increase economic growth
No, because we it makes firm lose a steam. They no longer have the motivation to produce good products/services
Income per capita formula using GDP and population
GDP/Population
Find population formula
Income/Income per capita
When Population Doubles?
GDP also doubles
GDP is a measure of ?
Production not a measure of sales to consumers
What are the two categories of income payments and what fraction of total income payments do they makeup
Labor-income 2/3/capital income 1/3
