Ch 7 - Wealth of Nations & Economic Growth

ECON 1102

economic growth

the growth rate of real per capita GDP

rule of 70

approximates the length of time necessary for a growing variable to double

physical capital

the stock of tools that include machines, structures, and equipment

human capital

the productive knowledge and skills that workers acquire through education, training, and experience

technological knowledge

the knowledge about how the world works that is used to produce goods and services

institutions

the “rules of the game” that structure economic incentives

• include laws and regulations, but also customs, practices, organizations, and social mores

property rights

important institutions for encouraging investment in physical and human capital

free rider

someone who consumes a resource without working or contributing to the resource’s upkeep

economies of scale

the decrease in the average cost of production that often occurs as the total quantity of production increases