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F. Chapter Six
Productivity and Growth
11
Economics
Undergraduate 1
08/08/2011

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Term
productivity
Definition
the ratio of a specific measure of output, such as real GDP, to a specific measure of input, such as labor; in this case productivity measures real GDP as a product of labor.
Term
labor productivity
Definition
output per unit of labor; measured as real GDP divided by the hours of labor employed to produce that output.
Term
per-worker production function
Definition
the relationship between the amount of capital per worker in the economy and average output per worker
Term
capital deepening
Definition
an increase in the amount of capital per worker; one source of rising labor productivity
Term
rules of the game
Definition
the formal and informal institutions that promote economic activity; the laws, customs, manners, conventions, and other institutional elements that determine transaction costs and thereby affect people's incentive to undertake production and exchange
Term
industrial market countries
Definition
economically advanced capitalist countries of Western Europe, North America, Australia, New Zealand, and Japan, plus the newly industrialized Asian economies of Taiwan, South Korea, Hong Kong, and Singapore
Term
developing countries
Definition
countries with a low living standard because of less human and physical capital per worker
Term
basic research
Definition
the search for knowledge without regard to how that knowledge will be used
Term
applied research
Definition
research that seeks answers to particular questions or to apply scientific discoveries to develop specific products
Term
industrial policy
Definition
the view that government-using taxes, subsidies, and regulators- should nurture the industries and technologies of the future, thereby giving these domestic industries an advantage over foreign competition
Term
convergence
Definition
a theory predicting that the standards of living in economies around the world will grow more similar over time, with poorer countries eventually catching up with richer ones
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