Questions and Answers
In which country is the average number of years of schooling the highest?
the United States
In the United States, about _____ of scientists and engineers work for private firms.
70%
Economic growth is negative when investment is:
less than depreciation
What is given in the textbook as a factor leading to new ideas that will be important for future economic growth?
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If the present capital stock is equal to 25, in the next period the capital stock will equal:
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When a good has spillovers, the good will be:
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If the present capital stock is equal to 36, depreciation of the capital stock will be equal to:
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What is given in the textbook as a factor leading to new ideas that will be important for future economic growth?
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To incorporate the effect of ideas on economic growth, we can write the production function as:
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What is given in the textbook as a factor leading to new ideas that will be important for future economic growth?
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Rates of economic growth have been decreasing over the past 10,000 years.
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If the present capital stock is equal to 16, the current level of output is:
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After one year, if an emerging country with a real GDP of 1391.4 billion grows to $1447 billion, what is the growth rate?
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What was the rate of growth in GDP in the U.S. in 2008?
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Which statement accurately characterizes the distribution of real GDP per capita internationally?
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If annual real GDP per capita growth in South Africa averages 1.8%, how long will it take the country to double its real GDP per capita?
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If Ireland took 1515 years to double its real GDP per capita, what was its average annual GDP per capita growth rate during this period?
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If annual real GDP per capita growth in Tanzania averages 0.8% per year, how long will it take the country to quadruple its real GDP per capita?
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If China took 4040 years to increase its real GDP per capita eightfold, what was its average economic growth during this period?
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What is the catch-up effect concerning developed and developing countries?
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Indicate whether each of the following items is an input in the aggregate production function for GDP.
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Classify each example as either relating to human capital, physical capital, or technology.
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Select the components or inputs associated with the production function where gross domestic product (GDP) is the output.
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What is the steady-state level of output?
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What is most likely to occur to the growth rate of output per capita as the country begins to rebuild after a capital stock decrease?
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Study Notes
Human Capital and Economic Growth
- The United States boasts the highest average years of schooling globally, correlating with higher GDP per capita.
- Approximately 70% of scientists and engineers in the U.S. are employed by private firms, underscoring the importance of incentives in fostering innovation.
- Economic growth is negatively impacted when investment is less than depreciation, leading to a diminished capital stock and lower future output.
Factors Influencing New Ideas
- Incentives play a crucial role in generating new ideas necessary for future economic growth, as summarized in the equation A(ideas) = population × incentives × ideas per hour.
- Population also contributes to the generation of new ideas, reinforcing the equation highlighted above.
- The rate of new idea creation is pivotal for economic advancement.
Production Functions and Capital
- For the production function Y = √K, with γ = 0.25 and δ = 0.05, a capital stock of 25 remains unchanged in the next period due to equilibrium between growth and depreciation.
- The depreciation of capital for a stock of 36 computes to 1.8, calculated by δK = 0.05 × 36.
- The alternative production function expression Y = A√K demonstrates the relationship between capital, ideas, and economic growth.
Economic Growth Rates
- An emerging country with a GDP increase from 1391.4 billion to 1447 billion represents a growth rate of 4%.
- The U.S. GDP growth rate in 2008 was 1.87%, reflecting economic performance during that year.
- Real GDP per capita shows significant international variation, with stark contrasts between wealthy and poorer nations.
The Catch-Up Effect
- Developing countries might experience faster growth than developed ones due to low initial capital levels, leading to higher productivity gains from small investments.
- Over time, the catch-up effect may slow down as diminishing returns set in, unless new technology is introduced.
Inputs in the Aggregate Production Function
- Inputs for GDP include physical capital, human capital, labor, and technology, while contributions to social security and bonds are not considered inputs.
- An oil discovery in Texas, educated workers, and technology upgrades represent positive inputs, enhancing economic productivity.
Classification of Capital Types
- Human capital, as seen in adult literacy and advanced education, is crucial for workforce effectiveness.
- Physical capital includes tangible resources such as company cars and computers that enhance production capacity.
- Technological advancements facilitate better production processes, illustrated by new distribution techniques or medical innovations.
Production Function Components
- Key components associated with the production function for GDP include human capital and labor, essential for economic output.
Marginal Product of Capital
- The marginal product of capital differs between countries; for example, Unestablished shows a higher marginal product than East Ablished, leading to faster growth.
- When capital stock falls, recovery post-disaster often results in increased output growth due to the higher marginal product of capital.
Steady-State and Growth Dynamics
- The steady-state level of output in a hypothetical economy is established at 500 units, representing balance in investment and depreciation.
- Following a natural disaster reducing capital stock to 100, the growth rate of output per capita is expected to rise as rebuilding activities leverage higher marginal product returns.
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Description
Test your knowledge on key concepts from ECON 101 Chapter 28 with these flashcards. This quiz covers important topics such as human capital, economic growth, and the workforce of scientists and engineers in the United States. Challenge yourself and reinforce your understanding of economic principles today!
