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15 Cards in this Set
- Front
- Back
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compound interest
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the payment of interest not only on the origional deposit but on all previously accumulated interest
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diminishing returns to capital
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if the amount of labor and other inputs employed is held constant, then the greater the amount of capital already in use, the less an additional unit of capital adds to production
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entrepreneurs
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people who create new economic enterprises
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formula for real GDP per person
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real GDP per person = avg labor productivity * share of pop employed
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formula for average labor productivity
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avg labor productivity = total real output / # employed workers
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formula for the share of population that is working
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share pop employed = # employed workers * total population
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key factors determining average labor productivity in a country:
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1)human capital
2)physical capital 3)natural resources 4)technologies 5)management and entrepreneurship 6)social and legal environment |
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If real output per worker is $50,000 and 80% of the population is employed, what is the output per person?
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$40,000
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Holding output per worker constant, the larger is the share of the employed population, the greater is the real GDP per person. True/False
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true
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All the following are determinants of average labor productivity: human capital, physical capital, technology, and monetary policy. True/False?
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false
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Holding labor constant, and increase in the number of capital goods used in production increases output at a decreasing rate. This is known as the principle of diminishing returns to capital. True/False?
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true
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The overall productivity increases when producers concentrate on those activities at which they are relatively most efficient. This is an example of the principle of __________.
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comparative advantage
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The government has a role to play in fostering average labor productivity. True/False
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true
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Building of roads, bridges, airports, and dams is an example of __________.
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public investment
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Research indicates that the relationship between growth in real GDP per person and air pollution is positive and constant. True/False?
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false
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