Quiz Four Flashcards
Why use rGDP to measure standard of living?
It represents the average person’s ability to buy goods and services
True or false: growth rates are compounding
True: small changes in growth rate make big differences in living standards over time
What does the economic growth model do?
Explains growth rates in rGDP per capita over the long run
What is labor productivity
Quantity of goods and services that can be produced by one worker
Increased labor productivity is influenced by:
Quantity of capital available to workers
Technology level
Technological change
Positive or negative change in a firm’s ability to produce a given level of output with a given quantity of input
A
Technology
Y
Real GDP
L
Number of workers
K
Capital
K/L
Capital per worker
Y/L
Output per worker
Per worker production function
Y/L = A* (K/L)^.3
Output per worker equals technology * capital per worker ^0.3
If the variable on the axis ____, move along the curve
Changes
If an external variable (ex: technology ) changes, the curve _____
Shifts