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Chapter 7

Terms in this set (14)

If the share of population employed in two countries is the same, average living standards will be higher in the country with:
higher average labor productivity
The key indicator of a country's living standard and economic well-being is:
real GDP per person
A nation's standard of living, as measured by real GDP per person, increases:
if either average labor productivity and/or the share of population employed increase
If real GDP per person were equal to $2,000 in 1900 and grew at a one percent annual rate, what would be the value of real GDP per person 100 years later?
$5,410
Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.

Number of (identical) Machines Total Packages Wrapped
1 10,000
2 13,000
3 15,000
17,000
If 50 percent of the population in a country is employed and average labor productivity equals $30,000, then real GDP per person equals:
$15,000
The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:
the less an additional unit of capital adds to production
Real GDP per person equals average labor productivity:
times the share of population employed
average labor productivity:
output per employed worker
Compound interest:
the payment of interest not only on the original deposit, but on all previously accumulated interest
Diminishing returns to captial:
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 o production
Entrepreneurs:
people who create new economic enterprises
Human capital:
an 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
Physical capital:
equipment and tools needed to complete one's work
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