Proximate Drivers of Growth

Question 1

Define investment with an example

Answer 1

The amount of equipment per unit time

Question 2

Define Capital with an example

Answer 2

The total amount of machinery for example at any given point

Question 3

Define depreciation with an example

Answer 3

Machinery gets worn away and so is no longer part of capital stock

Question 4

State the equation for accumulating capital

Answer 4

For a period of t,T kT = kt +it - depreciation t

Question 5

Define National saving

Answer 5

The income that is not consumed by households or government

Question 6

State the National saving equation

Answer 6

S = Y - C- G
Saving = Income - individual spending - government spending

Question 7

State the saving rate equation

Answer 7

R = S/Y
Rate = Saving/Income

Question 8

State the equation to determine investment

Answer 8

I = S - (X-M)
Investment = Saving - (Exports-Imports)

Question 9

Define Convergence

Answer 9

Pattern of growth that occurs when workers in less wealthy nations work extra hours to catch up in GDP
Less wealthy nations can copy the models of wealthier nations