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18 Cards in this Set
- Front
- Back
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GDP
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all output produced within the borders of a country during a given year
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GNP
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the sum of the value of all finished goods and services produced by a society during a given year
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PPP
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Purchasing Power Parity- A good is assigned the same value no matter if it is produced in country a or country B
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HDI
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Human Development Index-
Developed by UNDP Used since 1990 Not traditional way to measure growth measures deveopment level Cannot explain the degree of inequality number between 0 and 1 three dimensions- life expectancy, education, and per capita income |
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Characteristics of LDC
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Less Developed Countries- low level of productivity, low living standard, market imperfections, high popular growth rate
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Characteristics of Rapidly Growing Countries
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macroeconomic and political stability
effective governance and institution favorable environment for private enterprise investment in health and education |
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Economic growth and structural change
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the share of agriculture in GDP falls and share of industry rises
portion of labor force engaged in agriculture decilnes while portion in workforce in industry rises population shifts to urban areas large share of g/s are sold in markets |
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Engels Law
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as the family income rises, the proportion of income spent on food declines
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Aggregate Production Function
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aggregate production function- Y=F(K,L)
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Saving Equation
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S=sxY
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Saving-Investment Identity
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S=I
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Capital Accumulation
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^K=I-dXK
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Population Growth
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^L=nXL
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Harrod Domar Growth Model
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simple, easy to estimate
saving is necessary for growth technological change not explained fixed coefficient production function constant returns to scale L shaped isoquants fixed capital output ratio no steady state |
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Solow Growth Model
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more flexible than harrod domar
saving is necessary technology can be explained neoclassical production function constant returns to scale curved isoquants capital output ratio, not fixed stable equilibrium |
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Two Sector Labor surplus model
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Marginal Productivity of labor in agrilculture can be zero
wage does not equail MPL in agriculuture institutional fixed wage exists increasing population is bad for growth |
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Neoclassical Two Sector Model
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MPL in agriculuture cannot be zero
wage = MPL in agriculture instituional fixed wage does not exist increasing population causes icnreasing total output |
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When do market need gov't intervention
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monopoly, external economies, infant industry, underdeveloped institutions, macroeconomic imbalances, national goal- inequality
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