Advanced Macroeconomics Key Terms
age-specific fertility function - correct answer-average number of children that a given
mother will give birth to at a given age and in a given year.
aggregate production function - correct answer-a summation of all the contributions of
facotrs of production in a given economy. we see this particularly with the application of the
Solow model.
average growth rate - correct answer-the degree of growth in a country during a specified
amount of years.
capital dilution - correct answer-the negative effect that population growth has on capital per
worker. i.e. there now needs to be more capital to compensate for the relatively large
number of people that would be using them.
constant returns to scale - correct answer-a property of a production function which states
that if you multiply a production factor by a certain number, output will increase by that same
factor (proportional output).
consumption - correct answer-a proportion of income that is put toward acquiring goods and
services in the economy.
demographic transition - correct answer-the observable process by which a given country's
mortality rates and fertility rates start to decline as the economy develops.
depreciation - correct answer-the wearing-down of capital such that it is not as effective as it
was in the beginning. investment must be made to offset depreciation.
development accounting - correct answer-a way to isolate gaps in income levels between
countries due to variations in factor accumulation and productivity.
diminishing marginal returns - correct answer-a property of a production function which
states that if we keep adding units of input, eventually we will experience less output than
the input put in.
efficiency - correct answer-a measure of how well inputs and given technology are used in
producing output.
equilibrium - correct answer-conditions that balance markets (supply and demand). an
economy is in equilibrium when all its markets clear.
fertility transition - correct answer-the decline in birth that can be shown over the last couple
of centuries.
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