Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
29 Cards in this Set
- Front
- Back
|
Productivity |
the quantity of goods and services produced from each unit of labor output |
|
|
an economy's income equals |
an economy's output |
|
|
How is productivity determined |
physical capital per worker, human capital per worker, natural resources per worker, and technological knowledge |
|
|
physical capital per worker |
the stock of equipment and structures that are used to produce goods and services.
workers are more productive when they have proper tools |
|
|
human capital per worker |
knowledge and skills that workers acquire through education, training and experience. |
|
|
natural resources per worker |
the inputs into the production of goods and services that are provided by nature. Natural resources are not necessary for a successful economy, but they can make a country rich. |
|
|
technological knowledge |
society's understanding of the best ways to produce goods and services.
tech. knowledge=quality of books human cap=amount of time spent studying |
|
|
Production function |
Y=Af (L,K,H,N) |
|
|
in the production function, A= |
level of technology |
|
|
in the production function, L= |
labor |
|
|
in the production function, K= |
physical capital |
|
|
in the production function, H= |
human capital |
|
|
in the production function, N= |
natural resources |
|
|
what is one way to increase productivity by means of saving and investment |
invest more in current resources in the production of capital |
|
|
diminishing returns |
the benefits from an extra unit of input declines as the quantity of an input increases. |
|
|
Because of diminishing returns, what does savings lead to in the short run |
savings only leads to higher growth in the short run |
|
|
Because of diminishing returns, what happens to savings in the long run |
higher savings leads to a higher level of productivity and income, but not to an increase in growth. |
|
|
catch up effect |
the property whereby countries that start off poor tend to grow more rapidly than countries that start off rich. |
|
|
Foreign direct investment |
a capital investment that is owned and operated by a foreign country (active investment, when Ford builds a factory in Finland) |
|
|
foreign portfolio investment |
an investment financed with foreign money but operated by domestic residents (inactive investment, when US buys Mexican stock) |
|
|
Gross National Product GNP |
income earned by residents of a country both at home and abroad |
|
|
Growing GDP: education |
better education leads to a higher standard of living |
|
|
brain drain |
emigration of highly educated workers from underdeveloped countries to developed countries |
|
|
Growing GDP: health and nutrition |
healthier workers leads to increased productivity |
|
|
Property rights and political stability |
the ability of people to exercise authority over resources they own.
Political instability is a threat to property rights |
|
|
economic prosperity= |
political prosperity |
|
|
free trade and technology |
trade is like a form of technology- when a country trades for something it's like they have the technology to produce what they traded for |
|
|
Growth in GDP: research and development |
knowledge is a public good but patents turn knowledge into a private good |
|
|
Growth in GDP: population growth |
more people to produce but more people to consume |
