← Chapter 8 Terms Economic Growth Export Options Alphabetize Word-Def Delimiter Tab Comma Custom Def-Word Delimiter New Line Semicolon Custom Data Copy and paste the text below. It is read-only. Select All Economic growth (1) An outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology; (2) an increase of real output (gross domestic product) or real output per capita. Real GDP per capita Inflation-adjusted output per person; real GDP/population. Rule of 70 A method for determining the number of years it will take for some measure to double, given its annual percentage increase. Example: To determine the number of years it will take for the price level to double, divide 70 by the annual rate of inflation. Modern economic growth The historically recent phenomenon in which nations for the first time have experienced sustained increases in real GDP per capita. Leader countries As it relates to economic growth, countries that develop and use advanced technologies, which then become available to follower countries. Follower countries As it relates to economic growth, countries that adopt advanced technologies that previously were developed and used by leader countries. Supply factors An increase in the availability of a resource, an improvement in its quality, or an expansion of technological knowledge that makes it possible for an economy to produce a greater output of goods and services. Demand factor The increase in the level of aggregate demand that brings about the economic growth made possible by an increase in the production potential of the economy. Efficiency factor The capacity of an economy to combine resources effectively to achieve growth of real output that the supply factors (of growth) make possible. Labor productivity Total output divided by the quantity of labor employed to produce it; the average product of labor or output per hour of work. Labor-force participation rate The percentage of the working-age population that is actually in the labor force. Growth accounting The bookkeeping of the supply-side elements such as productivity and labor inputs that contribute to changes in real GDP over some specific time period. Infrastructure The capital goods usually provided by the public sector for the use of its citizens and firms (for example, highways, bridges, transit systems, wastewater treatment facilities, municipal water systems, and airports). Human capital The knowledge and skills that make a person productive. Economies of scale Reductions in the average total cost of producing a product as the firm expands the size of plant (its output) in the long run; the economies of mass production. Information technology New and more efficient methods of delivering and receiving information through use of computers, fax machines, wireless phones, and the Internet. Start-up firms A new firm focused on creating and introducing a particular new product or employing a specific new production or distribution method. Increasing returns An increase in a firm's output by a larger percentage than the percentage increase in its inputs. Network effects Increases in the value of a product to each user, including existing users, as the total number of users rises. Learning by doing Achieving greater productivity and lower average total cost through gains in knowledge and skill that accompany repetition of a task; a source of economies of scale.