AP Macroeconomics · Unit 5
Long-Run Growth: every key term you need
10 flashcard terms for AP Macroeconomics Unit 5, written to match the course framework. Study them here, then drill them as interactive flashcards — free, no account needed.
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Economic Growth Increase in real GDP over time. Growth rate: % change year-over-year. Long-run growth driven by productivity increase.
Sources of Growth Capital accumulation (invest in factories), technological progress (innovations), labor growth (population), human capital (education, training).
Productivity Output per unit input; key to growth. Higher productivity = same resources produce more. Tech drives productivity gains.
Capital-Labor Ratio Capital per worker. Higher ratio → higher productivity. Diminishing returns: each additional capital less productive.
Diminishing Returns As one input increases (fixed others), output increase slows. Fundamental economic principle.
Potential Output Maximum sustainable output at full employment. Long-run growth increases potential output. Short-run fluctuations around potential.
Per Capita GDP GDP per person = GDP / population. Better measure of living standards than total GDP. Growth accounts for population changes.
Developed vs Developing Developed: high per capita, stable growth, services/tech. Developing: low per capita, rapid growth, agriculture/manufacturing.
Convergence Hypothesis Poor countries grow faster than rich (catch-up growth); should eventually reach same per capita. Evidence mixed.
Unit 5 Summary Growth driven by capital, technology, labor. Productivity key measure. Long-run growth increases potential output and living standards.
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