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.