EPF2g. How Investment in Human Capital,
Capital Goods, and Technology Can Increase Productivity
Role of Producers & Consumers
in a Market Economy
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Increased productivity results from:
• Advances in technology• Improvements in physical and
human capital
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HOW DO INVESTMENTS IN HUMAN CAPITAL IMPROVE PRODUCTIVITY?
Essential question:
Human Capital Investments
• People invest in their human capital through education, training and experience
• Through investment in human capital, workers learn how to produce more efficiently, thus increasing productivity.
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HOW DO INVESTMENTS IN CAPITAL GOODS IMPROVE PRODUCTIVITY?
Essential question:
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Capital Goods Investments
• Workers can also improve their productivity by using physical capital (or real capital), such as tools and machinery.
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HOW DO INVESTMENTS IN TECHNOLOGY IMPROVE PRODUCTIVITY?
Essential question:
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Technology Investments
• Research and development can lead to increased productivity.
• Technological change can lead to increased productivity.
• Improvements in processes and procedures can lead to increased productivity.
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SUMMARY:
• Economic growth varies across countries because of differences in human and physical capital investments, and technologies.