Economic Growth, Productivity, and Living Standards

This set of flashcards covers key terms and concepts related to economic growth, productivity, and living standards as outlined in the lecture notes.

GDP per capita

The average economic output per person, calculated as real GDP divided by the total population.

Compound interest

A method of calculating interest where interest is earned on both the initial principal and the accumulated interest from previous periods.

Human capital

The collective skills, knowledge, and experience possessed by an individual or population, crucial for productivity.

Physical capital

Tangible assets that a company uses to produce goods and services, like machinery and buildings.

Diminishing returns

A principle where adding more of one factor of production, while holding others constant, increases output at a decreasing rate.

Entrepreneurship

The process of starting a business, taking on financial risks, and innovating to create goods and services.

Opportunity cost

The potential benefits that are missed out on when choosing one alternative over another.

Political and legal environment

The framework of laws and regulations that shape economic policies and influence business operations.

Costs of economic growth

The trade-offs associated with producing more capital goods, such as fewer consumer goods, less leisure, and environmental impacts.

Determinants of productivity

Six key factors influencing average labor productivity: human capital, physical capital, land and resources, technology, entrepreneurship, and political/legal systems.