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48 Cards in this Set

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  • Back
Productivity
the amt. of goods and services produced from each hour of a workers time
physical capital
the stock of equiptment and structures that are used to produce goods and services
human capital
the knowledge and skills that workers acquire through education, training and experience
natural resources
the inputs into the production of goods and services that are provided by nature. i.e: land, rivers, and mineral deposits
2 categories of natural resources
renewable or nonrenewable
technological knowledge
society's understanding of the best way to produce goods and serviceds
quantity of out put =
available production technology times a gunction of (labor, physical capital, human capital, and natural resources)
diminishing returns
the property whereby the benefit from an extra unti of an input declines as the quantity of the input increases
example of diminishing returns
when workers have a large quantity of capital to produce goods and services giving them more units of capital increases their productivity only slightly
catch up effect
property where countries that start off poor tend to grow more rapidly than countries that start off rich
foreign direct investment
a capital investment that is owned and operated by a foreign entity
e.g.: japan owns a honda plant in US
foreign portfolio investment
investment that is fincanced by foreign money but operated by domestic residents
e.g.: British ppl investing in US stock market companies
inward oriented policies
aimed at raising productivity and living standards within the country by avoiding interaction with the rest of the world.
# of years needed to double something
= 70/ growth rate per year
4 factors of production
1)PHYSICAL CAPTIAL
2)HUMAN CAPITAL
3)NATURAL CAPITAL
4)TECHNOLOGICAL RESOURCES
financial system
institutions tha match one person's savings with another's investment
financial markets
financial institutions where savers can directly provide funds to borrowers
1.STOCKS
2.BONDS
principal
when buyer gives their money in exchange for the promise of interested and repayment of original amt. borrowed
perpetuity
a bond that never matures but interest is paid on it foever
default
failure to pay interest or principal
-when ppl think that the probability of default is hight they demand higher interest to compensate them
junk bonds
when financially shaky co.'s try to raise money the pay VERY high interest rates
tax treatment
the way that the tax laws treat the interest earned on a bond
-interest on most bonds is taxable incomes
municipal bonds
bond issued by stated and local gov't.
you dont have to pay federal income tax on these
equity finance
sale of a stock to raise money
-owner of shares are part owners of company
debt finance
sale of bonds to raise money
-owner of bond is creditor of corporation
stock index
computed as an avg of a group of stock prices
financial intermediaries
financial institutions thru which savers can indirectly provide funds to borrowers
1)BANKS
2) MUTUAL FUNDS
index funds
mutual funds that buy all the stocks in a given stock index
open economies
interact with other economies around the world
Y=C+I+G+NX
CLOSED ECONOMY
ECONOMY THAT DOESNT INTERACT WITH OTHER ECONOMIES
Y=C+I+G
national savings(saving)
the total income in the economy that remains after paying for consumption and govt purchases noted by S

S=Y-C-G
S=I
savings=investing
T stands for the amt the govt collects from households minus the amt it pays back
-pays back in the form of transfer payments
S=(Y-T-C)+(T-G)
Private saving
Y-T-C
the income that the households have left after paying for taxes and consumption
Public Saving
T-G
the tax rev. that the govt has left after paying for its spending
Budget surplus and Deficit
T-G is pos then govt has an excess of tax rev left over:Surplus
T-G is neg then govt has a shortfall of tax rev from spending: deficit
loanable funds
refers to all income ppl have chosen to save and lend out rather than use for their own consumption
For loanable funds
Savings is the source of_____
Investment is the source of ______
Supply
Demand
Supply and Demand of loanable funds depends on the
real interest rate
crowding out
decrease in investment that results from govt borrowing
According to BLS all adults are either
employed
unemployed
not in labor force
unemployment rate=
(#of unemployed/labor force)x100
labor force participation rate=
(labor force/adult pop.)x100
most spells of unemployment are ____ but most unemployment observed at and given time is ____ _____
short
long term
frictional un employment
unemployment that results b/c it takes time for workers to search for the jobs that best suite their tastes and skills
structural unemployment
unemployment that results b.c of the # of jobs abailable in some labor market cant provide a job for everyone that wants one
sectoral shifts
changes in the composistion of demand amoung industries or regions
-they temporarily cause unemployment
efficiency wages affect
-worker health
-worker turnover
-worker effort
-worker quality
reservation wage
the lowest wage a person will accept