Exam 12: Production and Growth: Part B

Randomized control trials can help economists evaluate the impact of global aid programs in the same way that doctors test drugs.

An increase in capital increases productivity only if it is purchased and operated by domestic residents.

International data on the history of real GDP growth rates shows that over the last 120 years or so,rich countries got richer and poor countries got poorer.

In the United States in 2014 real GDP per person was about $56,000,while in some poor countries real GDP per person was less than $5,000.

Economists generally agree on the role the government should play in promoting productivity and economic growth.

Petroleum is an example of a nonrenewable resource.

Over the period 1900-2014,Brazil's rate of economic growth exceeded that of China.

Assuming constant returns to scale,if two countries are otherwise the same,the one that is poorer grows faster.

Real GDP per person in rich countries,such as Germany,is sometimes more than 10 times that of poor countries like India.

Over the period 1870-2014,the United States experienced an average annual growth rate of real GDP per person of about 1.8 percent per year.

If a rich country reduced subsidies to domestic producers of goods that poor countries have a comparative advantage producing,the standard of living in these poor countries would likely rise.

If it could increase its growth rates slightly,a country with low income would catch up with rich countries in about ten years.

Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day.Journey's productivity was 1/4.

Like physical capital,human capital is a produced factor of production.

Over the last 140 years or so,on average Canada's real GDP per-person grew faster than that of the U.K.

In countries where women are discriminated against,policies that increase the likelihood of career success and educational opportunities for women are likely to decrease the birth rate.

Since 1870 Canadian and U.S real GDP per person grew from below to above that in the United Kingdom.The explanation for this is likely that productivity grew faster in Canada and the U.S.than in the United Kingdom.

The catch-up effect refers to the idea that poor countries,despite their best efforts,are not likely ever to experience the economic growth rates of wealthier countries.

Income rises after a charity gives poor families free livestock.The harvest that year was also particularly bountiful.The charity should take full credit for the observed increase in the standard of living.

Investment in human capital has opportunity costs,but investment in physical capital does not.