AP Macro Unit 6
Terms in this set (24)
Real GDP per Capita
Real GDP divided by Population. This is the "average" output of the economy per person measured in a base year prices.
What is used to measure economic growth over time?
Real GDP per capita
Formula for Real GDP per Capita
Standard of Living:
the degree of wealth and material comfort available to a person or community.
What happens if output is growing faster than the populations?
Average standard of living will rise
What happens if the population is growing faster than output?
Average standard of living will fall
Rule 70 (know how to use it)
Tells us how long it takes real GDP per-capita to double.
Number of years for variable to double = 70/Annual growth rate of variable
What role does productivity play in long run economic growth?
Productivity is the primary thing in making economy grow.
What causes productivity to rise and or fall?
Productivity growth is created by human, physical capital, and technology
the skills and knowledge gained by a worker through education and experience
the human-made objects used to create other goods and services
Diminishing Returns to Physical Capital
if we add more tools to physical capital it will grow just not by a lot
What role, if any does savings play in economic growth?
u have to have savings to have economic growth
if u have more savings economic growth will increase!
Be able to explain the diminishing returns to physical capital by using the graph below.
demonstrates ideas of diminishing returns
Be able to explain what causes the effects in the graph below.
moving on first curve (A-C) is generally caused by increases in phys. capital
Moving from C-D is tech
the basic physical and organizational structures and facilities (e.g., buildings, roads, and power supplies) needed for the operation of a society or enterprise.
What role does political stability play in economic growth?
if u dont have this u wont have growth.
no foreigner will buy ur tools if ur government is bad!!
Explain the Convergence Hypothesis
the hypothesis that poorer economies' per capita incomes will tend to grow at faster rates than richer economies.
Positive and Negative Externalities
side effects . positive gimme more. negative thank u next
Why are environmental problems more difficult to solve than resource problems?
environmental problems don't provide incentives to change behavior. going back to pollution
a lessening in value
Which curve is shifting in the AS/AD model when new technology and production measures are developed?
shifting long run
If a country experiences an increase in real potential GDP, which curve in the AS/AD model has shifted? Which way?
What causes the PPC to shift?