Economic Growth

These flashcards cover key vocabulary terms related to economic growth, including definitions and explanations relevant to understanding the concepts presented in the lecture notes.

Economic Growth

An increase in the production of goods and services in an economy over time.

Aggregate Production Function

A mathematical representation of the relationship between total output and the total inputs used in production.

Human Capital

The skills, knowledge, and experience possessed by an individual or population, contributing to economic productivity.

Physical Capital

The tools, machines, buildings, and equipment used in the production of goods and services.

Technological Progress

The advancement of technology, leading to improved methods of production and increased output.

Diminishing Returns

A principle stating that increasing one input while keeping others constant will eventually yield lower increases in output.

Catch-up Effect

Rapid economic growth that occurs when a poorer country increases its physical capital investment, allowing it to grow faster than richer countries.

Capital Accumulation

The growth of capital resources, including physical capital and financial assets, which is essential for sustained economic growth.

Investment

The allocation of resources, typically financial, into a venture with the expectation of generating profit or growth.

Public Policy

Government actions that influence economic behavior, public welfare, and institutional frameworks affecting economic growth.

GDP per capita

Indicates a country’s standard of living measured by dividing real GDP by the population.

Constant returns to scale

Increasing all inputs by some proportion will cause output to rise by the same proportion (ex: doubling inputs will double outputs)

Elements of the Aggregate Production Function: Labour, ________, Physical Capital, Technological Progress.

Human Capital

Four factors of Labour

• Population size

• Working age fraction of the population

• Share of working-age people who chose to work

• Hours each worker puts in

Capital Stock

The total quantity of physical capital that can be used in the production of goods and services.