Chapter 9 Flashcards

(27 cards)

1
Q

Long run economic growth

A

The process by which rising productivity increases the average standard of living .

Measured in real GDP per capita

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2
Q

Business cycle

A

Alternating periods of economic expansion and recession

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3
Q

Growth rates

A

2005 - 13,254. 2007- 13,312

13,312-13,254/ 13,254 * 100 = 4%

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4
Q

Rule of 70

A

If GDP is growing at 5% per year , it will double when?

70/5 = 14 yearsf

Years to double = 70/ growth rate

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5
Q

Labor productivity

A

The quantity of good and services that can be produced by one worker or by one hour of work

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6
Q

Capital

A

Manufactured goods that are used to produce other goods and services .example, computer, machine , ect

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7
Q

Capital stock

A

Amount of physical capital stock available in a country.

Capital per stock increases = worker productivity increases

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8
Q

Human capital

A

Accumulated knowledge and skills workers acquire from education and trading or life experiences

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9
Q

What influences economic growth ?

A

Technology changes

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10
Q

Technology

A

The process by which a firm uses to turn inputs to output doc goods and services

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11
Q

Entrepreneurs

A

Someone who operates a business bringing together factors of. Production to produce goods and services.

Vital for technological change

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12
Q

potential GDP

A

The level of real GDP Attained when all firms are producing at capacity * not maximum ( calculated using normal work force)

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13
Q

Financial system

A

The system of financial markets and financial intermediates through which firms acquire funds from households.

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14
Q

Financial markets

A

Markets where financial securities ( stocks bonds ) are bought and sold

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15
Q

Financial Sercurity

A

A document or electronic that states terms under which funds pass fro, buyer of Sercurity who is lending funds to seller

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16
Q

Stocks

A

Financial Sercurity that represents partial ownership of a firm

17
Q

Bonds

A

Financial securities that represents promises to repay a fixed amount of funds

18
Q

Financial intermediates

A

Firms such as banks , mutual funds, pension funds, and insurance companies , that borrows funds from savers and lend them to borrowers

19
Q

Financial system has 3 services for savers and borrowers

A

Risk sharing, liquidity , information

20
Q

How to calculate GDP

A
Y= C + I + G+ NX 
GDP = consumption + investment. + government purchases + net exports
21
Q

Balance budget

A

Government spends same amount that it collects in taxes

22
Q

Budget deficit

A

Government spends more than it collects in taxes

23
Q

Market for loan able funds

A

The interaction of borrowers and lenders that determine the ,arrest interest rate and the quantity of loan able funds exchanged

24
Q

Crowding out

A

A decline in private expenditures as a result of an increase in govern,ten spending

25
When expansion occurs
Increase production | Increase employment
26
Durables
Kgoods to last more than 3 years Effected more by business cycle
27
Recession
Inflation decreases and unemployment rate increases