ECON 101 Lecture Notes - Lecture 12: Diminishing Returns, Production Function, Investment Goods
Document Summary
Incomes and growth around the world: since growth rates vary, the country rankings can change over time- Poor countries are not necessarily doomed to poverty forever, e/g singapore incomes were low in 1960 and are quite high now. Ri(cid:272)h (cid:272)ou(cid:374)tries (cid:272)a(cid:374)"t take their status for gra(cid:374)ted: they (cid:373)ay (cid:271)e o(cid:448)ertake(cid:374) (cid:271)y poorer (cid:271)ut faster growing countries. A (cid:272)ou(cid:374)try"s sta(cid:374)dard of li(cid:448)i(cid:374)g depe(cid:374)ds o(cid:374) its a(cid:271)ility to produ(cid:272)e goods a(cid:374)d ser(cid:448)i(cid:272)es. This ability depends on productivity, the average quantity of g & s produced per unit of labor input. Y= real gdp = quantity of output produced. Whe(cid:374) a (cid:374)atio(cid:374)"s (cid:449)orkers are (cid:448)ery produ(cid:272)ti(cid:448)e, real gdp is large a(cid:374)d incomes are high. When productivity grows rapidly, so do living standards. Physical capital per worker; recall: the stock of equipment and structures used to produce g & s is called (physical) capital denoted k.
