Week 6 - Production and Growth

Question 1

gdp per capita

Answer 1

the level of real gdp at a point in time and divides by the population to get a measure of income per head

Question 2

gdp per worker

Answer 2

a measure of income per head of the working population

Question 3

productivity

Answer 3

the amount of goods and services produced for each hour of a workers time

Question 4

physical capital

Answer 4

makes workers more productive

Question 5

human capital

Answer 5

the knowledge and skills that workers acquire through education, training and experience

Question 6

natural resources

Answer 6

inputs into production that are provided by nature, such as land, rivers and mineral deposits

Question 7

technological knowledge

Answer 7

the understanding of the best ways to produce goods and services

Question 8

depreciation

Answer 8

the wearing out of old capital, and it causes the capital stock to fall

Question 9

causes of growth

Answer 9

• changes in savings rates
• increase in population
• increase in technology

Question 10

creative destruction

Answer 10

the process where new technologies replace the old ones and new skills are needed which render existing skills obsolete

Question 11

government policies that raise productivity and living standards

Answer 11

• encourage saving and investment
• encourage investment from abroad
• encourage education and training
• establish secure property rights and maintain political stability
• promotes free trade
• promote research and development

Question 12

foreign direct investment

Answer 12

when capital investment is owned and operated by a foreign entity

Question 13

foreign portfolio investment

Answer 13

when investments financed with foreign money but is operated by domestic residents