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14 Cards in this Set

  • Front
  • Back
marginal product of labor (MPL)
increase in the amount of output from an additional unit of labor.

value of the marginal product of labor (VMPL)
the marginal product of an input times the price of the output.


marginal profit = VMPL - W
maximize the total utility of everyone in society. (a dollar means more to a poor person then a rich person). also problem of leaky bucket - will not try to reach complete equality.

j. bentham and john stuart mill
chose policies that are just if behind a "veil of ignorance". aka help the poor, redistribute even if it is a leaky bucket.

john rawls
punish crimes and enforce voluntary agreements, but not redistrute income. don't care about equality, what one owns is his.

robert nozick
the market value of all final goods and services produced within a country in a given period of time.

Y = C + I + G + NX (exports-imports)
nominal GDP
production of g & s at current prices.

sum of price x quanity
real GDP
production of g & s at constant prices.

sum of price from base year x quantity
GDP deflator
reflects g & s but not quantities produced.

= (nominal GDP/Real GDP) x 100
consumer price index (CPI)
measure of overall cost of g & s bought by a typical consumer.

1. determine basket

2. find price of each good

3. compute cost of total basket

4. choose base year and compute CPI in each year
(basket of year z/basket of base year) x 100

5. use CPI to compute interest rate (%Δ of price index)
inflation in year z
= (CPI year z - CPI year y)/(CPI year y) x 100
two types of inflation rates
nominal: w/o correction for inflation effects

real: corrected for effects of inflation

real = nominal - inflation rate
national saving (saving)
total income in the economy that remains after paying for consumption and gov purchases.

S = I
private saving
private = income that households have left after paying for taxes and consumption
(Y - T - C)

S = (Y - T - C) + (T - G)

T is gov tax revenue minus transfer payments (SS, welfare)
public saving
public = the tax revenue that the government has left after paying for spending

(T - G)

S = (Y - T - C) + (T - G)

T is gov tax revenue minus transfer payments (SS, welfare)