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11 Cards in this Set
- Front
- Back
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Long-run economic growth
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The process by which rising productivity increases the average standard of living.
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Rule of 70
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# of years to double = 70/growth rate
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Labor productivity
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The quantity of goods and services that can be produced by one worker or by one hour of work.
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Capital
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goods used to produce other goods & services.
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What determines the rate of Long-Run Growth?
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1.Increase in capital/Hour worked.
2.Technological change |
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Potential GDP
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The level of GDP attained when all firms are producing at capacity.
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Financial Market
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Markets where financial securities, such as stocks and bonds, are bought and sold.
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Financial Intermediaries
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Firms, such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers.
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Equation for private saving
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Y(GDP)+TR(xfer payments) - C (consumption) - T (taxes)
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Equation for public saving
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T(taxes) - G(gov't purchases) - TR(xfer payments)
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Market for loanable funds
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The interaction of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged.
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