Aggregate Production Function

Definition

The aggregate production function refers to the relationship between the total output of an economy and the inputs used in production, such as labor and capital. It shows how these inputs combine to produce goods and services.

Related terms

Productivity: Productivity measures how efficiently inputs are used in the production process. It is often represented by output per unit of input.

Human Capital: Human capital refers to the knowledge, skills, and abilities that workers possess. It contributes to productivity and economic growth.

Technology: Technology represents advancements in knowledge and techniques that improve production processes, leading to increased output.