Be able to explain how to use the per worker production function graph and the

Be able to explain how to use the per worker

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Be able to explain how to use the "per-worker production function" graph and the corresponding equation. (Ch. 11.2 and notes) Be able to explain the fundamental role of markets and institutions in economic growth. (Ch. 2.3, Ch. 11.5, and notes)
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o Markets generate incentives and signals to add capital and technology Creative destruction : one industry or business replaces another in search of more profits o Institutions – to be rich countries need a lot of technology, A, and K/L. To grow we need to increase: Good institutions Vibrant markets High A and K/L High Y/L High GDP/person o **Markets work best in economies with good institutions** Be able to explain how rising productivity can lead to falling employment in a given industry yet is essential for long-run growth. (notes) o Layoffs are essential for growth and rising real incomes. o Employment can increase with layoffs: 1. More output by fewer workers in a firm – higher real wages 2. New industries employ the laid off and many more; employment actually rises 3. Labor saving technology – KEY to prosperity Be able to explain what the future might portend for economic growth in the U.S. (notes) o Negative trends: 1. Slowing human capital formation 2. Falling labor force participation rate Definition: (working & looking for a job / those aged 16 and up)
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3. Rising inequality Moderated somewhat by falling household size and health and government benefits 4. Innovation slowdown For households after 1958 1900-1958: cars, phones, TV, airplanes, radio, plumbing, etc. Be able to explain the "key terms" in these sections and know how they relate to concepts and other key terms. (Note that some of these terms, particularly "capital" and "technology," don't carry their usual meanings.) Know the typical rates of economic growth and real per capita GDP for the countries that we've studied. (notes) ° ° Readings from the Macroeconomics Supplement "The Ultimate Global Antipoverty Program" o According to this article, what has happened to poverty around the world in recent years?
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