Chapter 7 Economic Growth

This set of flashcards covers key concepts and facts related to economic growth as outlined in Chapter 7 of the lecture notes.

What is the definition of modern economic growth?

Modern economic growth refers to the period of rapid economic growth that started around 1870.

What major event sparked rapid economic growth in the early 1800s in England?

The Industrial Revolution sparked rapid and sustained economic growth.

What is labor productivity?

Labor productivity is the value of what is produced per worker or per hour worked.

How much more did the average U.S. worker produce per hour in 2020 compared to the early 1970s?

The average U.S. worker produced over twice as much per hour in 2020 than they did in the early 1970s.

What is the importance of sustained economic growth?

Sustained economic growth is crucial as it significantly impacts the standard of living over long periods.

What does the formula GDP at start date × (1 + growth rate of GDP)^years = GDP at end date represent?

It represents how to estimate future GDP based on the current GDP and growth rate.

What factors contribute to economic growth according to growth accounting studies?

Physical capital, human capital, and technology are the key factors that contribute to economic growth.

What is capital deepening?

Capital deepening occurs when society increases capital per person.

What is economic convergence?

Economic convergence is the pattern where economies with low per capita incomes grow faster than those with high per capita incomes.

What advantages might low-income countries have regarding productivity?

Low-income countries might benefit from easier increases in productivity due to diminishing marginal returns and access to existing technologies.

What are the potential barriers for low-income countries in achieving economic convergence?

Lack of secure private property, non-competitive markets, and insufficient governmental support can hinder the adaptation and use of new technology.

What does the concept of diminishing returns imply for technology adoption in richer and poorer countries?

Rich countries may avoid diminishing returns through rapid technological advances, making it hard for poorer countries to catch up.