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Macro Chapter 12
Term | Definition |
---|---|
Production function | the relationship between the inputs a firm uses and the output it creates |
Aggregate production function | the relationship between all the inputs used in the macroeconomy and the total output (GDP) of that economy |
Marginal product | the change in output associated with one additional unit of input |
Diminishing marginal product | phenomenon occurring when the marginal product of an input falls as the quantity of the input rises |
Steady state | the condition of a macroeconomy when there is no new net investment |
Depreciation | a fall in the value of an asset over time |
Net investment | investment minus depreciation |
Convergence | the idea that per capita GDP levels across nations will equalize as nations approach the steady state |
Exogenous growth | growth that is independent of any factors in the economy |
Endogenous growth | growth driven by factors inside the economy |