Economic Growth and Government Intervention

These flashcards cover key concepts from the lecture on economic growth, government intervention, and the importance of education and infrastructure in enhancing productivity.

What do countries that invest in bank accounts, CDs, government bonds, and stocks hope to achieve?

They hope to see the value of their money increase.

How is adult literacy linked to economic improvement in countries like China and Argentina?

Higher levels of adult literacy lead to a more knowledgeable workforce, which increases productivity.

What does R&D stand for and why is it important?

R&D stands for Research and Development; it is important because it leads to new technologies that can save lives and drive economic growth.

What role does the government play in funding basic sciences and research institutions?

The government funds basic sciences and research, which are necessary for innovation and technological advancements.

What are the six ways the government can improve productivity?

1) Invest in infrastructure, 2) Subsidize education, 3) Maintain a well-functioning financial system, 4) Protect private property rights, 5) Ensure intellectual property rights, 6) Provide political stability and good governance.

How does a well-functioning financial system affect entrepreneurship?

If people trust banks and deposit money, banks have funds available to lend to entrepreneurs for new business ventures.

What is the significance of protecting private property rights?

It allows individuals to make decisions about their property and ensures that they can benefit from their investments and inventions.

What is the purpose of the patent system?

It incentivizes innovation by granting inventors exclusive rights to their inventions for a limited time.

How do English common law countries typically fare economically compared to countries with other legal systems?

Studies show that former English colonies often have better economic outcomes due to a more flexible legal system that supports entrepreneurship.

What is the difference between median income and per capita income?

Per capita income is an average of income per person in a region, while median income represents the middle value where half earn less and half earn more.

What is sustainable growth in an economy?

Sustainable growth depends on continuing economic development despite limited natural resources and population growth.

What does the balance of payments measure?

The balance of payments measures the transactions between a country and the rest of the world, including trade deficits and transfer payments.