Production
The quantity of goods and services produced from each unit of labor input?
Productivity
A factory produces 500 units with 10 workers.What is output per worker?
50 units per worker
The stock of equipment and structures that are used to produce goods and services?
Physical Capital
A country’s GDP per worker increases from 2,000 to 2,200 in one year.Find the growth rate.
(2200−2000)/2000 = 10%
The property wheraby the benefit from an extra unit of an input declines as the quantity of the input increases?
Diminishing returns ( Catch-up Effect)
A company introduces robots that make production faster and cheaper. What is the main growth factor?
Technological progress
A firm increases machines from 5 to 10, and output rises from 100 to 160.
What is the increase in output?
60 units
An outward-oriented policy that intended to integrate a country into the world economy
Free Trade
Why might a country with many natural resources still remain poor?
Because it may lack education, technology, or good institutions.
An economy saves 25% of its $1,000 income.How much is invested?
$250
Why do poorer countries sometimes grow faster than richer countries?
Because of the catch-up effect and ability to adopt existing technologies.
How can improving schools and universities affect a country’s economy in the long run?
It builds human capital, increasing productivity and future income.
First machine adds 50 units, second adds 40, third adds 30.What is happening to marginal product?
It is decreasing (diminishing returns)
What is the relationship between saving and economic growth?
More saving leads to more investment, which increases capital and growth.