ECON 203 Study Guide - Midterm Guide: Production Function, Loanable Funds, Diminishing Returns

• School: University of Calgary
• Department: Economics
• Course: ECON 203
• Professor: Peter Tracey

Document Summary

Productivity: quantity of goods and service produced from each hour of a worker"s time, determinants: physical capital, human capital, natural resources, technological knowledge. Y = af(l , k ,n , h ) capital. Constant returns to scale: if we increase/decrease l, k, n, h all by same proportion the output will increase or decrease by that amount. Output won"t double unless all other variables do. Catch-up effect: property whereby countries that start off poor tend to grow more rapidly than countries that start rich. Other: also discussed core values of development (sustenance, self-esteem, freedom to servitude) Financial institutions: financial institutions through which savers can directly provide funds to borrowers. Bond (aka an iou: certificate of indebtedness, identifies time at which loan can be paid, debt finance, term length of time until the bond matures, credit risk probability that borrower will fail to pay principle/interest.