diffusion  the spreading of an innovation throughout the economy.
diminishing returns  a situation in which successive increases in the use of an input, holding other inputs constant, will eventually cause a decline in the additional production derived from one more unit of that input.
growth accounting formula  an equation that states that the growth rate of productivity equals capital’s share of income times the growth rate of capital per hour of work plus the growth rate of technology.
human capital  a person’s accumulated knowledge and skills.
innovation  applications of new knowledge in a way that creates new products or significantly changes old ones.
invention  a discovery of new knowledge.
learning by doing  a situation in which workers become more proficient by doing a particular task many times.
Malthusian equilibrium  a situation in which production equals the subsistence level of output.
new economy  a term used to describe the period of high productivity growth, attributed largely to better computer and information technology.
productivity  output per hour of work.
technological change  improvement in technology over time.
technology  anything that raises the amount of output that can be produced with a given amount of labor and capital.