Macro Practice – Flashcards

The level of real GDP person and the growth rate of real GDP per person...

Over the past century in the United States, real GDP per person has grown, on average, by about

The one variable that stands out as the most significant explanation of large variations in living standards around the world is

A nation's standard of living is best measured by its

Level of real GDP per person measures

Growth rate measures

A rapid increase in the number of workers, other things the same, is likely in the short term to

Productivity

what is productivity?

when productivity increases:

production function formula

Y =

A =

L =

K =

H =

N =

Y/L =

K/L =

H/L =

N/L =

F ( ) =

what does the production function measure?

production function is used to describe

when production curve is linear:

when a production curve is circular:

if the function increases/decrease by the factor x:

if every factor in the function doubled,

if a single factor in the function doubled,

An economy's income is

Productivity is the amount of goods and services produced for each hour of a worker's time. It is linked to a

As technology improves, A rises, so the economy produces

On a production function, as capital per worker increases, output per worker increases. This increase is

If an economy with constant returns to scale were to double its physical capital stock, its available natural resources, and its human capital, but leave the size of the labor force the same, its output and productivity

If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity

You bake cookies. One day you double the time you spend, double the number of chocolate chips, flour, eggs, and all your other inputs, and bake twice as many cookies. Your cookie production function

Suppose a country imposes new restrictions on how many hours people can work. If these restrictions reduce the total number of hours worked in the economy, but all other factors that determine output are held fixed, then

Determinants of productivity:

physical capital (K)

The inputs used to produce goods and services (labor, capital, etc.) are called

The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called

Accumulating capital requires that society

Productivity is higher when the average worker

human capital (H)

Human capital includes the skills accumulated in

human capital raises

producing human capital requires inputs in the form of

Students can be viewed as "workers" who have the important job of

Productivity is higher when the average worker has

natural resources (N)

natural resources take two forms:

other things equal, more N allows a country to produce

in per-worker terms, an increase in N/L causes a(n)

despite its status as one of the richest countries in the world, Japan has

technological knowledge (A)

Technological knowledge refers to

technological progress means

technological knowledge vs. human capital

Matt is going to college to become a pharmacist. What he learns about existing information

Saving means only one thing

In the long run, an increase in the saving rate

According to studies using international data, an increase in the saving rate

Saving and investment is one way that a government can

reducing consumption =

"When workers have a relatively small quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity by a relatively large amount." This statement is consistent with the view that

Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then

If there are diminishing returns to capital, then increases in the capital stock

diminishing returns

_________ refers to the idea that it is easier for a country to grow fast and so catch-up if it starts out relatively poor

Foreign direct investment:

Foreign portfolio investment:

In recent decades Americans have increased their purchase of stocks of foreign-based companies. The Americans who have bought these stocks were engaged in

investment from abroad is one way for poor countries

If WarmWear, a U.S. manufacturer of winter clothing, opens a new factory in Austria, then Austrian GNP increases by less than Austrian GDP, because

When Chile experiences investment from abroad, it experiences, as a result,

in the long run, the higher saving rate leads to higher level of productivity and income, but not to

according to studies of international data on economic growth, increasing the saving rate can lead

it is easier for a country to grow fast if it starts out

small amounts of capital investment can

with the amount of capital per worker already so high, additional capital investment

studies of international data on economic growth confirm this catch-up effect: controlling for other variables

if workers have little K, giving them more

if workers already have a lot of K, giving them more

to raise K/L and hence productivity, wages, and living standards, the government can also encourage

education

property rights

political instability

example of political instability

examples of free trade

inward-oriented policies

outward-oriented policies

examples of inward-oriented policies

examples of outward-oriented policies

countries with inward-oriented policies have generally

countries with outward-oriented policies have

technological progress is the main reason why

public good

policies to promote technological progress:

population growth may affect living standards in 3 different ways:

An increase in a country's population may contribute to the rate of technological progress because

Thomas Malthus's predictions turned out to be wrong due to

Other things the same, higher population growth reduces the amount of physical capital per worker, but there is some evidence that it

propriety knowledge

common knowledge

the patent gives the inventor a property right over her invention, turning her new idea from a

the patent system

"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement

Investment in

Which of the following best states economists' understanding of the facts concerning the relationship between natural resources and economic growth?

example of an opportunity cost of investment in human capital

Suppose that the U.S. undertakes a policy to increase its saving rate. This policy will likely

If your firm's production function has constant returns to scale and you increase all your inputs by 60%, then your firm's output will

In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity?

Daniel owns a coffee kiosk. All of his employees work 8 hours per day. In 2011, he employed 6 people who produced a total of 912 cups of coffee each day. In 2012, he hired a seventh employee and production increased to 1008 cups of coffee each day. In Daniel's kiosk, productivity

Which of the following statements is correct? In 2010,

Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were

Over the last ten years productivity grew faster in Mapoli than in Romeria while the population and total hours worked remained the same in both countries. It follows that

Other things the same, if a country raises its saving rate, when is productivity growth higher?

Rapid population growth

The level of real GDP person and the growth rate of real GDP per person

Country A and country B both increase their capital stock by one unit. Output in country A increases by 12 while output in country B increases by 15. Other things the same, diminishing returns implies that country A is

If over a short time a large number of teenagers become old enough to find employment and a much smaller number of people retire, then productivity