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26 Cards in this Set
- Front
- Back
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Fact 1 about long run economic growth?
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Real GDP per person grows over time in most countries.
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Fact 2 about long run economic growth.
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Small differences in growth rates sustained over a long period of time lead to large differences in levels.
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GDP2008 equals __.
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(1 + g2008)GDP2007
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(1+g2008)(1+g2007)(1+g2006)...(1+g1901)GDP1900 =
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GDP2008
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Fact 3 about long run economic growth.
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Real GDP per person grows faster in some countries than in others.
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Fact 4 about long run economic growth.
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There is substantial variation in living standards across countries.
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The quantity of goods and services produced in a country per person.
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Real GDP per person.
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When is real GDP per person high?
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When labor productivity is high.
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The quantity of goods and services produced per worker.
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Labor Productivity
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What are four determinants of labor productivity?
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Physical capital per worker, human capital per worker, natural resources per worker, and technological knowledge.
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A function describing the relationship between the quantity of inputs used in production and the quantity of output from production.
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Production Function
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A function describing the relationship between the quantity of inputs used in a country and the quantity of output produced in a country.
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Aggregate Production Function
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The production function of a country is __.
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Y = AF(K,L,H,N)
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Variable that is quantity of output.
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Y
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Variable that is quantity of physical capital.
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K
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Variable that is quantity of labor.
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L
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Variable that is quantity of human capital.
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H
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Variable that is quantity of natural resources.
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N
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Variable of a function showing the relationship between inputs and outputs.
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F( )
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Variable of the level of technology.
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A
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The aggregate production function often has a property called constant returns to scale: For any positive number x, xY= __.
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AF(xK,xL,xH,xN)
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Setting x=1/L yields Y/L=__.
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AF(K/L,1,H/L,N/L)
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What does the output per worker depend on?
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The level of technology, physical capital per worker, human capital per worker, and natural resources per worker.
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What are some policies aimed at increasing physical capital per worker?
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Encouraging saving and investment (less consumption today, more capital and output tomorrow), encouraging investment from abroad, protecting property rights and promoting political stability.
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What are some policies aimed at increasing human capital per worker?
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Providing education, health and nutrition, and promoting political stability.
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What are some policies aimed at increasing technological knowledge?
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Sponsoring research and development and the patent system.
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