ECON 252 CH 7 NOTES

ECON 252 CH 7 NOTES - o Diminishing returns: as capital per...

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ECON 252 CH 7 NOTES Productivity: the quantity of goods and services produced from each unit of labor input. Determined by: o Physical Capital (K), i.e. equipment o Human Capital (H), i.e. skills and knowledge o Natural Resources (N), i.e. nature o Technological knowledge (A) i.e. innovations - Y = A F(L,K,H,N) where L = quantity of labor and Y = GDP - Y/L = A/L F(1,K/L,H/L,N/L) per worker Savings + Investment o Reducing consumption = increasing saving o More saving = better future standard of living
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Unformatted text preview: o Diminishing returns: as capital per worker is increased, output per worker increases as well, but at a slower rate. o Catch up effect: the property whereby countries that start off poor tend to grow more rapidly than countries that start off rich. o To increase savings and investments:-Investment from abroad-Education-Health and nutrition-Property rights and political stability-Free trade-Population growth...
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