Growth

What is capital deepening

increase in the amount of capital per worker in an economy.In simpler terms, it means workers have more or better tools, machines, or equipment. movement along the production line, tech is a jump on the line

Dutch disease

exporting certain natural resources, domestic currency appreciates, other segments suffers and become globally uncompetitive

Classical Model: think real GDP growth is

temporary. If real GDP increase above the subsistence level, a population growth will bring it down.

Classical Model: increase in population increase or decrease economic growth

decrease

Classical Model:does standard of living increase with technological improvement

no

Neoclassic Model: economic growth in real GDP per person depend purely on

exogenous tech progress

Neoclassic Model: in the long run, growth rate of out put per capita is related to

1) rate of tech progress 2)population growth rate 3) savings or investment rate

Neoclassic Model: economy equilibrium occurs when the economy grows at the

steady state rate of growth ( output-to-capital ratio is constant)

is technology growth a factor of Neoclassic Model

No, it assumes tech growth is external

endogenous growth theory, increase in population _ economic growth

increase economic growth. Because it believes economic growth depends on ability and willingness of people to innovate

is there a sustainable growth rate in endogenous growth theory

there is no steady state growth rate so that increased investment can permanently increase the rate of growth. ECONOMY GROWTH IS NOT LIMITED

for a developing country, does investment in primary and secondary school help economic growth

yes

is population growth good for GDP per capita measure

population growth help GDP growth but not really per capita growth

Grinold-Kroner model YOU BETTER REMEMBER THIS

Expected Return to Equity = dividend yield + expected P/E + inflation rate + real economic growth - change in shares outstanding

the long term equity price appriciation almost exactly equal to

NOMINAL GDP growth

capital deepening is movement

along the production, new technology is a jump in the production

labor force growth rate is 4%, labor productivity is 5% what is potential GDP

9%

Endogenous theory

internal, meaning people’s ability and willingness to innovate drives economy, therefore population growth is good

developing countries, irrespective of their particular characteristics, will eventually equal developed countries in per capita output is example of

club convergence

low standard of living , is decreasing tax gonna help GDP per capita

not likely

high GDP growth , government want to bridge the gap between their country and developed country, is the real interest rate likly to be high or low

high real interest rate and high expected real asset return

high rate or saving and investment, import technologies, greater investment in R&D improve standard or living is which theory

endogenous, because saving and investment decisions can generate self-sustaining growth at a permanently higher rate. Neoclassic does not believe in permanent higher growth (better living)

what is Output elasticity of capital

a, (ΔY/Y = ΔA/A + α(ΔK/K) + (1 – α)(ΔL/L))

does absolute convergence theory say the level of

bsolute convergence does not, however, imply that the level of per capita income will be the same in all countries regardless of underlying characteristics.