econ 1202final exam study guide 5
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Last updated 12:26 AM on 12/13/22
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11 Terms
1
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until what year was everyone poor?
1800; AVERAGE WORLD INCOME PER PERSON (1990 DOLLARS)
2
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why did poverty levels that high stop after 1800?
new inventions, advancements in technology, exploration boost, etc.
3
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what does US growth look like…
* Real GDP per capita has risen about eight-fold since the start of the 20th century (trend)
* It has not risen consistently every year (business cycles)
* It has not risen consistently every year (business cycles)
4
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what are the 2 types of growth?
1. EXTENSIVE ECONOMIC GROWTH (Real GDP growth…good but can be “deceptive”!!)
2. INTENSIVE ECONOMIC GROWTH (Real __*Per Capita*__ GDP growth…the “gold standard”)
5
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why we care about the other half…
* reduces poverty levels
* higher life expectation (especially in children)
* if the other half is good GDP per person is good
* improves higher education % and accessibility
* higher life expectation (especially in children)
* if the other half is good GDP per person is good
* improves higher education % and accessibility
6
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rule of 70:
a “quick hand” way to estimate the number of years it takes for an amount/variable (typically an amount of money) to double.
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formula: *Number of years to double= 70/Growth Rate*
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formula: *Number of years to double= 70/Growth Rate*
7
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The most conspicuous aspect of recent growth is…
*rise of a global middle class. Rapidly rising incomes among hundreds of millions of previously poor people*
8
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What determines long term economic growth?
Income per capita (Y/pop) is driven by labor productivity (Y/L)
* \
A Nation’s Standard of Living is Determined by its Ability to Produce Goods and Services (GDP)
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Long run variations in countries’ standards of living is driven almost entirely by labor productivity
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Y/L → Y/Pop
* \
A Nation’s Standard of Living is Determined by its Ability to Produce Goods and Services (GDP)
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Long run variations in countries’ standards of living is driven almost entirely by labor productivity
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Y/L → Y/Pop
9
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What factors determine labor productivity?
* Market and Production Organization (Level of Specialization)
* Physical capital per worker
* Human capital per worker
* Technological knowledge/Innovation
* behind blackboard → institutions and culture
* Physical capital per worker
* Human capital per worker
* Technological knowledge/Innovation
* behind blackboard → institutions and culture
10
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What drives or are factors underlying labor productivity (Y/L)?
Smithian Growth
Schumpeterian Growth
North’s Contributions
External Effects (Economics of Agglomeration) from Urbanization
Modern Approaches (Robert Solow et. al.)
Schumpeterian Growth
North’s Contributions
External Effects (Economics of Agglomeration) from Urbanization
Modern Approaches (Robert Solow et. al.)
11
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what does (Y/L) mean?
labor productivity = total output / total input
Ex: Let's say your company generated $80,000 worth of goods or services (output) utilizing 1,500 labor hours (input). To calculate your company's labor productivity, you would divide 80,000 by 1,500, which equals 53.
Ex: Let's say your company generated $80,000 worth of goods or services (output) utilizing 1,500 labor hours (input). To calculate your company's labor productivity, you would divide 80,000 by 1,500, which equals 53.