# Econ2Hw7
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1.
( a )
the stock of equipment and structures that are used to produce goods and services
( b )
the property whereby countries that start off poor tend to grow more rapidly than countries that start off rich
2.
These two facts are not in conflict, for countries can benefit from international trade by specializing in producing products in which they have a comparative advantage and importing others. This is the way to reach a high standard of living.
3.
( a )
This change will probably have a positive impact on economic growth. Increased investment means allocating more resources towards capital formation and in turn leads to higher productivity.
( b )
Businesses and entrepreneurs get to improve their productivity and enhance competitiveness. Increased demand in labor makes workers' and employees' wages and working environments better. Future generations also benefits from the economic growth.
Consumers on the other hand, suffer from the reduction of consumption and will have fewer choices.
4.
( a )
It may be consumption, education, healthcare, or research and development.
( b )
Yes. Misallocating resources and neglecting other essential factors such as human capital will cause inefficiency.
( c )
It may be infrastructure development or technological advancements.
( d )
Yes. Mismatch between skills and labor market demand causes inefficiency.
5.
Increasing the low education level of young women in development countries is effective in increasing human capital and in turn making economic growth. This can be described by the catch-up effect.
6.
( a )
People with higher income are capable of affording more health expenditures thus better health outcomes.
( b )
A healthy person is able to provide labor and work. Therefore they're more likely to have a higher income.
( c )
People with lower income probably has worse health outcomes, therefore we should allocate more public healthcare resources for them.