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11 Cards in this Set
- Front
- Back
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Physical Capital
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The stock of equipment and structures that are used to produce goods and services
Capital is a factor of produciton used to produce all kinds of goods and services, including more capital |
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Human Capital
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The knowledge and skills that workers acquire through education training, and experience
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Natural resources
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the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits
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Technological knowledge
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society's understanding of the best ways to produce goods and services
Can be Proprietary or Common Knowledge |
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Traditional view of the produciton process is that capital is subject to diminishing returns
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The property whereby the benefit from an extra unit of input declines as the quantity of the input increases
pg. 561 |
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In the long run the higher saving rate leads to a higher level of productivity and income but not to higher growth in these variables
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true
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The Catch up effect
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The property whereby countries that start off poor tend to grow more rapidly than countries that start off rich
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Foreign Direct Investment
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A capital investment that is owned and operated by a foreign entity
(America building a factory in mexico) |
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Foreign Portfolio Investment
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An invetstment that is financed with foreign money but operated by domestic residents
(America investing in a mexican company) |
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Factors that Affect Productivity
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Savings & Investment
Investment from Abroad Education Health & Nutrition Property Rights & Political Stability Free Trade R&D Population Growth |
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Productivity depends on:
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physical capital, human capital, natural resources, technological knowledge available to workers
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