Chapter 12 Production and Economic Growth

Chapter 12 Production and Economic Growth - Chapter 12...

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Chapter 12 Production and Economic Growth Productivity is an important determinant of a nation’s wellbeing. Determinants of Productivity Physical Capital - the stock of equipment and structures that are used to produce goods and services=> workers are more productive if they have tools with which to work, more and better tools allow workers to produce output more quickly and accurately. Human Capital - the knowledge and skills that workers acquire through education, training and experience=> raises nation’s ability to produce goods and services. Producing human capital re- quires inputs in the form of teachers, libraries and student time. Natural Resources -the inputs into the production of goods and services that are provided by nature, such as land, rivers and mineral deposits=> there are two forms: r enewable and non-re- newable . Differences in natural resources are responsible for some of the differences in stand- ards of living around the world. However natural resources may not be absolutely essential for a country to be highly productive, countries like Japan can utilize international trade to make up for its lack of natural resources. Technological knowledge -the society’s understanding of the best ways to produce goods and services. e.g in the past most americans work on farms; today advanced in technology made that only a small fraction of the population needed to work on the farm to feed the rest of the popula- tion and labour can be used for other goods and services.=> There are many forms of techno- logy= 1. technology is common knowledge- after one person uses it, everyone becomes aware of it. 2. Technology is proprietary - it is known only by the company that discovers it. 3. Techno- logy is proprietary for a short time (patent that expires)
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Economic Growth and Public Policy What can government policy do to raise productivity and living standards?
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Chapter 12 Production and Economic Growth - Chapter 12...

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