KEY CONCEPTS

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

economic growth
compounding
real GDP
real GDP per capita
Rule of 70
production function
productivity
investment in human capital
capital-to-labor ratio
diminishing returns to capital
catch-up effect
total factor productivity
infrastructure
The total value of final goods and services produced in a country in a year measured using prices in a base year.
The portion of output produced that is not explained by the number of inputs used in production.
The capital employed per worker. A higher ratio means higher labor productivity and, as a result, higher wages.
Measures the output that is produced using various combinations of inputs and a fixed level of technology.
How effectively inputs are converted into outputs. Labor productivity is the ratio of the output of goods and services to the labor hours devoted to the production of that output. Productivity and living standards are closely related.
Countries with smaller starting levels of capital experience larger benefits from increased capital, allowing these countries to grow faster than countries with abundant capital.
The public capital of a nation, including transportation networks, power-generating plants and transmission facilities, public education institutions, and other intangible resources such as protection of property rights and a stable monetary environment.
Each additional unit of capital provides a smaller increase in output than the previous unit of capital.
Provides an estimate of the number of years for a value to double, and is calculated as 70 divided by the annual growth rate.
Improvements to the labor force from investments in skills, knowledge, and the overall quality of workers and their productivity.
Real GDP divided by population. Provides a rough estimate of a country’s standard of living.
Usually measured by the annual percentage change in real GDP, reflecting an improvement in the standard of living.
The ability of growth to build on previous growth. It allows variables such as income and GDP (as well as debt) to increase significantly over time.
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