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Flashcards in Macro Interim Deck (61):
1

National Income Identity (Y = C + I + G + NX)

GDP = Consumption + Investment + Government Purchase + (exports-imports)

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GDP = Consumption + Investment + Government Purchase + (exports-imports)

National Income Identity (Y = C + I + G + NX)

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Nominal GDP

(price level)(real GDP)

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(price level)(real GDP)

Nominal GDP

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L-Index

Computation in Change of Real GDP with initial prices

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Computation in Change of Real GDP with initial prices

L-Index

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P -Index

Computation in Change of Real GDP with final prices

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Computation in Change of Real GDP with final prices

P -Index

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Chain Weighting

average of L-Index and P-Index

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average of L-Index and P-Index

Chain Weighting

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Growth Rate (percentage change per capita)

          (Yt+1 - Y) / Yt

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(Yt+1 - Yt ) / Yt

Growth Rate (percentage change per capita)

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Level of Per Capital Income

 Y(t+1) = Yt(1+g)

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 Y(t+1) = Yt(1+g)

Level of Per Capita Income

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Constant Growth Rule

Yt = Yo(1+g)t 

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Yt = Yo(1+g)t 

Constant Growth Rate 

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Standard Scale when graphed looks like

 exponential growth

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Ratio Scale when graphed looks like

a straight line, linear. 

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Computation of Growth Rate

g(constant) = (Yt / Yo)1/t - 1

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g(constant) = (Yt / Yo)1/t​ - 1

Computing growth rate

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Growth rate of ratio: z =x/y

gz = gx - gy

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gz = gx - gy

Growth rate of ratio: z = x/y

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Growth rate of ratio: z =(x)(y)

gz = gx + gy

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gz = gx + gy

Growth rate of ratio: z =(x)(y)

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Growth rate of ratio: z = xa

gz = (a)(gx)

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gz = (a)(gx)

Growth rate of ratio: z = xa

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Production Function: K = machine; L = workers

Y = F(K, L) = A(K1/3)(L2/3)

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Y = F(K, L) = A(K1/3)(L2/3)

Production Function: K= machine; L = workers

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Paramter

Input that is generally fixed over time

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Input that is generally fixed over time

Paramter

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Exogenous Variable

   INPUT that is allowed to change over time but determined aheaded of time. (POPULATION)

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 INPUT that is allowed to change over time but determined aheaded of time. (POPULATION)

Exogenous Variable 

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Endogenous Variable

OUTCOME (determined by supply and demand)

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OUTCOME (determined by supply and demand)

Endogenous Variable

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Potential Output

Measurment of per capita GDP evolvement if prices are completely flexible and resources fully employed

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Measurment of per capita GDP evolvement if prices are completely flexible and resources fully employed

Potential Output

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Economic Profit

Total Revenue minus Total payments for INPUT

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Total Revenue minus Total payments for INPUT

Economic Profit

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Accounting Profit

Revenue minus Payment to labor

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Revenue minus Payment to labor

Accounting Profit

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output per person in equilibrium

y*= (A-bar)(K1/3)

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y*=(A-bar)(K1/3)

output per person in equilibrium

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(A-bar)

Productivity Parameter (Total Factor of Production/Residual)

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Productivity Parameter (Total Factor of Production/Residual)

(A-bar)

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Law of Diminishing Return

All inputs held constant and 1 input increases and tend to a large number, increasing of output diminishes

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All inputs held constant and 1 input increases and tend to a large number, increasing of output diminishes

Law of Diminishing Return

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Human Capital

Stock or skills that individuals accumulate to make them more productive 

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Stock or skills that individuals accumulate to make them more productive 

Human Capital

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Solow Growth Model

Turning exogenous variables into endogenous variables, where capital is accumulated over time 

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Turning exogenous variables into endogenous variables, where capital is accumulated over time 

Solow Growth Model

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Capital Accumulation

Kt+1 = Kt + It - (d-bar)Kt

Inital Capital(t) + investment used for production(t) -depreciation

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Kt+1 = Kt + It - (d-bar)Kt

Inital Capital(t) + investment used for production(t) -depreciation

Capital Accumulation

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Steady-State level of Capital

y* = ((s-bar)(A-bar) / (d-bar))3/2 (L-bar)

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y* = ((s-bar)(A-bar) / (d-bar))3/2 (L-bar)

Steady-State level of Capital

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Steady-State level of Production

y* = (A-bar)3/2(s-bar/d-bar)1/2​ (L-bar)

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y* = (A-bar)3/2(s-bar/d-bar)1/2 (L-bar)

 

Steady-State level of Production

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Investment Equation

(Share of Output for investment) - (weighting diff of real interest and MPK)(MPK)

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(Share of Output for investment) - (weighting diff of real interest and MPK)(MPK)

Investment Equation

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Nominal

Valued at Current Price

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Valued at Current Price

Nominal

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