[ECON 202] Chapter 10 – Flashcards
Unlock all answers in this set
Unlock answersquestion
4 different ways to calculate GDP:
answer
Production Consumption Factors of production Value added
question
real GDP per capita
answer
Real GDP / Population OR (Nominal GDP/GDP Deflator )/ Population
question
Which of the following does NOT lead to long-run economic growth??
answer
Increase in average wages
question
Potential GDP
answer
increases over time as technological change occurs. increases over time as the labor force grows.
question
real GDP per capita
answer
real GDP per capita is the amount of production in the economy, per person, adjusted for changes in the price level. It is most commonly used to measure the average standard of living.
question
long-run economic growth
answer
which rising productivity increases the average standard of living.
question
For longer time periods we can solve for the GROWTH RATE g using:
answer
Previous real GDP * (1 + g)t = Current real GDP t = number of time periods between the previous and current periods.
question
Use the Rule of 70
answer
70 / growth rate
question
Factors affecting labor productivity growth
answer
Increases in capital per hour worked Capital is manufactured goods that are used to produce other goods and services. Computers Factory buildings Trucks Machine tools Human capital represents the accumulated knowledge and skills workers possess. Education Training Technological change are improvements in capital or methods to combine inputs into outputs that allows workers to produce more in a given period of time. New machinery New equipment New software Entrepreneurs are critical for implementing technological change. They create ways to bring together the factors of production to produce better or lower-cost products.
question
Factors affecting labor productivity growth
answer
provide secure rights to private property. Investments The government can also facilitate: A financial system Systems of education Systems of communication
question
Saving rate
answer
(Income - Spending) / Income
question
National Savings
answer
Private saving + Public saving
question
Private saving
answer
Household saving + Businesses saving Y - T* - C
question
Public saving
answer
Net Taxes (T*) - Government purchases (G) = T* - G T* = Taxes - Transfers - Government interest payments
question
Budget Deficit and Budget Surpluses:
answer
T* = G (or T = G + t) Balanced government budget T* > G Government budget surplus T* < G Government budget deficit
question
Firms that act as financial intermediaries LOADING... match households that have excess funds with firms that want to borrow funds. What other key services does the financial system provide to savers and? lenders? ?(Mark all that? apply.)
answer
-Provides an easy method of exchanging a financial security for money. -Allows savers to spread their money among many financial investments. -Collects and communicates information about borrowers to savers
question
Evaluate the following? statement: ?"Saving money is not lending. How can it? be? When I save my? money, I put it in a bank. I? don't loan it out to someone? else."
answer
incorrect. The supply of loanable funds is determined by household saving.
question
Panel? (a) above shows an idealized business cycle. Panel? (b) shows an actual business cycle by plotting fluctuations in real GDP during the period from 1999 to 2002. Use the graphs to help determine which one of the following statements is NOT? true:
answer
Inconsistent movements in real GDP around the business cycle peak can mean that the beginning and ending of a recession are? clear-cut.
question
What is the general relationship between the business cycle and unemployment and? inflation?
answer
During an? expansion, unemployment falls and inflation increases.
