Ch 9: Long-Run Economic Growth Flashcards

These flashcards cover key vocabulary and concepts regarding long-run economic growth, productivity, and the factors that influence global economic disparities based on the provided lecture transcript.

Real GDP per capita

A measure of economic growth calculated as real GDP divided by the population size, used to track changes in living standards while adjusting for inflation and population growth.

Rule of 70

A mathematical formula used to determine how many years it takes for a variable to double, calculated as $\frac{70}{\text{annual growth rate}}$.

Labor productivity

Often referred to simply as productivity, this is the amount of output produced per worker.

Physical capital

Human-made resources such as buildings, machinery, and equipment used in the production of goods and services.

Human capital

The improvement in labor created by the education, training, and knowledge embodied in the workforce.

Technology

The technical means and methods available for the production of goods and services.

Aggregate production function

A hypothetical function that illustrates how productivity (real GDP per worker) depends on physical capital per worker, human capital per worker, and the state of technology.

Diminishing returns to physical capital

A condition where each successive increase in physical capital per worker leads to a smaller increase in productivity, assuming human capital and technology are held constant.

Growth accounting

An estimation technique used to determine the contribution of each major factor in the aggregate production function to overall economic growth.

Total factor productivity

The amount of output that can be achieved with a given amount of factor inputs; its growth is typically interpreted as the result of technological progress.

Research and development (R&D)

Spending intended to create and implement new technologies and improved instructions for working with resources.

Infrastructure

Physical foundations for economic activity, such as roads, power lines, and public health systems, often provided or regulated by the government.

Convergence hypothesis

The theory that international differences in real GDP per capita tend to narrow over time, provided that factors like education and infrastructure are held equal across countries.

Sustainable long-run economic growth

Economic growth that can continue over time despite the limited supply of natural resources and potential environmental degradation.

Carbon tax

A market-based incentive in the form of a fee on greenhouse gas emissions, intended to address climate change.

Cap and trade system

A government-mandated, market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants.