Krugman's AP Macroeconomics: Section 7
Terms in this set (13)
rule of 70
# of years it takes for a variable to double = (70/annual growth rate of variable)
three main reasons for growth in productivity
Physical capital, human capital, technology.
Consists of human-made goods such as buildings and machines used to produce other goods and services.
The improvement in labor created by the education and knowledge of members of the workforce.
The technical means for the production of goods and services.
diminishing returns to physical capital
A characteristic of an aggregate production function where, holding the amount of human capital and technology constant, each successive increase in the amount of physical capital per worker leaders to a smaller increase in productivity.
aggregate production function
A hypothetical function that shows how productivity depends on the quantities of physical capital/worker and human capital/worker as well as the state of technology.
effects of natural resources
Natural resources can lead to a higher real GDP/capita, all other things equal. Often, all other things aren't equal.
total factor productivity
The amount of output that can be achieved with a given amount of factor inputs.
Roads, power lines, ports, information networks, and other underpinnings for economic activity.
Is world growth sustainable?
Most economists think so. Population increases and greenhouse provide complications, but they believe it's likely that solutions/alternatives will be found. Often, environmental issues have to do with complicated interactions with the government.
economic growth graphically
PPC shifts out. LRAS shifts right.