Term
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Definition
| a sustained increase in real GDP |
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Term
| How the economic growth rate measured? |
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Definition
| by annual growth rate in real GDP |
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Term
| What does the growth rate of real GDP tell you? |
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Definition
| how rapidly an economy is expanding but does not tell us about changes in the standard of living of the population |
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Term
| What is the better measure of a standard of living? |
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Definition
| the real GDP per capita (the real GDP divided by the population) |
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Term
| What is the formula for calculating the years it will take for real GDP per capita of a country to double? |
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Definition
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Term
| How does the rule of 70 work? |
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Definition
the # of years it will take for a variable that grows continuously over time to double equals 70 divided by the variable's annual growth rate
# of years for vari to dub = 70/Vari's annual growth rate |
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Term
| what are the main determinants of diff countries LR Econmic Growth rates differing? |
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Definition
| Labor, Physical capital, human capital, technology (availability of nat resources) |
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Term
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Definition
| equip and tools avail for workers |
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Term
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Definition
| the accumulated knowledge/skills workers acquire from edue, training and experience |
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Term
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Definition
| the method how a firm turns inputs into output (goods and services) |
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Term
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Definition
| resources naturally avail in a country |
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Term
| wat is labor productivity measurbed y |
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Definition
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Term
| labor productivity increases if _____ increases and _____ improves |
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Definition
| capital per worker; techno of production |
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Term
| increases in labor productivity, human capital, and techno advance lead to ___ |
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Definition
| an increase in the LR economic growth |
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Term
T/F:
natural resources are classified as renewable and non-renewable?
availabilityof natural resources alone guarantees economic growth? |
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Definition
| True; False, it can help an economy grow faster, but alone, does not guarantee growth |
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Term
| The aggregate production function is a function that shows ____ |
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Definition
how productivity (real GDP per worker) depends on the quantities of physic capital per worker and human capital per worker as well as the state of technology.
e.g. Aggregate production function: Y/L = f(K/L, H/L, T) |
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Term
| economies grow at diff rates due to diffs in: _____ |
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Definition
| savings and investment spending, foreign investment, edu, infrastructure, research and development, political stability, protection of property rights |
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Term
| What does the convergence hypothesis state? |
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Definition
| international diffs in real GDP per capita tend to narrow over time, provided the factors that affect growth, such as edu, infrastructure, and favorable policies and institutions, are held equal across countries. |
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