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Chapter 14

Chapter 14

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Department
Economics
Course
ECON 1100
Professor
Eveline Adomait
Semester
Fall

Description
Chapter 14: Economic Growth, Productivity, and Living Standards Key Terms: Power of Compound Growth: the fact that seemingly small differences in growth rates, maintained over long periods, will produce large differences in magnitude Compound Interest: the payment of interest not only on the original deposit but also on all previously accumulated interest Rule of 72: a rule of thumb stating that to find the number of years it takes a magnitude to double when it is growing at a constant rate, divide 72 by the growth rate Real GDP Per Person= average labour productivity X share of population employed (Y/POP)= (Y/N) X (N/POP’) Diminishing Returns to Capital: if the amount of labour and other inputs employed is held constant, then the greater the amount of capital already in use, the less an additional unit of capital will tend to add to production Dutch Disease: the tendency in an economy with a booming natural resource sector for the manufacturing sector to decline Entrepreneurship: behavior that results in new products, services, technological processes, or organizational innovations that are productivity enhancing Technological Depletion Hypothesis: the theory that the productivity slowdown after 1973 was due to the depletion of the backlog of technological advances made but not implemented during the 1930’s and the Second World War World Bank: a publically founded international organization that provides assistance to low-income and the middle-income countries to foster their development Developing Economies: a term used to refer to low and middle-income economies Resource Curse: term used to refer to low and middle-income economies with an abundance of natural resources Official Development Assistance (ODA): grants/subsidized loans primarily provided to low-income countries with the stated purpose of promoting their development Important Substitution Policy: uses trade protection to develop local manufacturing of goods that can replace imported manufactured goods Neo-Liberal Policies: include reduced taxes, privatization, and deregulation and trade liberalization Washington Consensus: the policy advice that developing countries should privatize, liberalize, and pursue low inflation and balanced budgets Millennium Development Goals: eight international goals, including the eradication of extreme poverty in the world by 2015 Global Warming: the increase in the average temperature of the earth’s surface since th the mid 20 century Kyoto Protocol: a refinement of the United Nations Framework Convention on Climate Change, attempting to fight global warming by getting countries to commit to specific targets for reductions in emissions of greenhouse gases Economic Growth and Productivity - Real GDP per person (rough indicator of living standards
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