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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.
ΔQ/ΔL 

value of the marginal product of labor (VMPL)

the marginal product of an input times the price of the output.
P x MPL marginal profit = VMPL  W 

utilitarianism

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 

liberalism

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 

libertarianism

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

GDP

the market value of all final goods and services produced within a country in a given period of time.
Y = C + I + G + NX (exportsimports) 

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) 