ECON102 Chapter Notes - Chapter 7: Physical Capital, Diminishing Returns, Human Capital
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ECON102 Full Course Notes
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Since growth rate 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. Rich countries can"t take their status for granted: they may be overtaken by poorer but faster-growing countries. Recall one of the ten principles from chp. A country"s standard of living depends on its ability to produce g&s. This ability depends on productivity, the average quantity of g&s produced from each hour of a worker"s time. Y = real gdp = quantity of output produced. When a nation"s workers are very productive, real gdp is large and incomes are high. When productivity grows rapidly, so do living standards. Recall: the stock of equipment and structures used to produce g&s is called [physical] capital, denoted k. Productivity is higher when the average worker has more capital (machines, equipment, etc. ) E. x. , an increase in k/l causes an increase in y/l.
