ECON 1BB3 Chapter 7: Chapter 7 – Production and Growth.docx

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

The average person in a rich country has an income more than ten times as high as the average person in a poor country. An economy"s gdp measures both the total income earned in the economy and the total expenditure on the economy"s output of goods and services. Although imperfect, the level of real gdp is a good gauge of economic prosperity, and the growth of real gdp is a good gauge of economic progress. Productivity: the quantity of goods and services produced from each hour of a worker"s time. The total income earned by everyone in the economy. The total expenditure on the economy"s output of goods and services. Physical capital: also known as capital, it is the stock of equipment and structures that are used to produce goods and services. Inputs used to produce goods and services labor, capital, etc are called the factors of production.