All Flashcards
How does increased technology affect the PPF?
It shifts the PPF rightward, indicating increased production possibilities.
How does increased investment in human capital affect productivity?
It increases productivity by improving the skills and knowledge of the workforce.
How does saving relate to economic growth?
Saving provides the funds for investment, which drives economic growth.
How does an increase in physical capital affect the LRAS?
It shifts the LRAS curve to the right, increasing potential output.
How does improved technology affect the aggregate production function?
It shifts the function upward, meaning more output can be produced with the same inputs.
How does a decrease in natural resources impact a country's PPF?
It shifts the PPF inward, reducing the potential output of the economy.
How does increased government spending on education affect human capital?
It increases human capital by improving the skills and knowledge of the workforce.
How does increased automation affect productivity?
It increases productivity by allowing for more efficient production processes.
How does a recession affect economic growth?
It slows down economic growth by decreasing production and investment.
How does free trade affect economic growth?
It promotes economic growth by allowing countries to specialize in the production of goods and services in which they have a comparative advantage.
What is the difference between economic growth and economic development?
Economic growth is an increase in real GDP, while economic development is broader and includes improvements in living standards, health, and education.
Differentiate between renewable and nonrenewable resources.
Renewable resources can be replenished (timber), while nonrenewable resources cannot (oil).
What is the difference between short-run and long-run economic growth?
Short-run growth is an increase in actual output, while long-run growth is an increase in potential output.
What is the difference between nominal GDP and real GDP?
Nominal GDP is measured in current prices, while real GDP is adjusted for inflation.
What is the difference between absolute advantage and comparative advantage?
Absolute advantage is the ability to produce more of a good or service than another producer, while comparative advantage is the ability to produce a good or service at a lower opportunity cost.
What is the difference between capital goods and consumer goods?
Capital goods are used to produce other goods and services, while consumer goods are used to satisfy consumer wants and needs.
What is the difference between microeconomics and macroeconomics?
Microeconomics studies the behavior of individual consumers and firms, while macroeconomics studies the behavior of the economy as a whole.
What is the difference between positive and normative economics?
Positive economics is based on facts and can be tested, while normative economics is based on opinions and cannot be tested.
What is the difference between economic efficiency and equity?
Economic efficiency is the optimal allocation of resources, while equity is the fairness of the distribution of resources.
What is the difference between economic growth and sustainable development?
Economic growth is an increase in real GDP, while sustainable development is economic growth that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Define economic growth.
A country's ability to produce more goods and services over time.
Define real GDP per capita.
The average output per person, adjusted for inflation.
Define the aggregate production function.
Shows the relationship between inputs (labor, capital) and output.
Define productivity.
How much output each worker can produce; efficiency.
Define physical capital.
Machinery, buildings, and tools used in production.
Define human capital.
The skills and education of workers.
Define investment.
Spending on capital goods to increase future output.
Define savings.
Income not spent on consumption; crucial for funding investment.
What is the LRAS curve?
Long-Run Aggregate Supply curve, represents potential output at full employment.
What is the PPF?
Production Possibilities Frontier, shows the maximum combinations of goods and services an economy can produce.