Chapter 18 - Economic growth

labor productivity

Output per person equals average times the share of the population that is employed.

Real GDP

per person, a basic indicator of living standards, has grown dramatically in the industrialized countries.

labor productivity

Output per person equals average times the share of the population that is employed.

Real GDP

per person, a basic indicator of living standards, has grown dramatically in the industrialized countries.

Sophistication of the technologies

applied in production.

labor productivity

Average : output per employed worker.

labor productivity

In the long run, increases in output per person and hence living standards arise primarily from increases in average .

Average labor productivity

output per employed worker

This growth reflects the power of compound interest

Even a modest growth rate, if sustained over a long period of time, can lead to large increases in the size of the economy

Human capital

amalgam of factors such as education, training, experience, intelligence, energy, work habits, trustworthiness, and initiative that affects the value of a worker's marginal product

Diminishing returns to capital

if the amount of labor and other inputs employed is held constant, then the greater the amount of capital already in use, the less an additional unit of capital adds to production

Average labor productivity

Output per employed worker

Human capital

Amalgam of factors such as education, training, experience, intelligence, energy, work habits, trustworthiness, and initiative that affects the value of a worker's marginal product

Diminishing returns to capital

If the amount of labor and other inputs employed is held constant, then the greater the amount of capital already in use, the less an additional unit of capital adds to production