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### 14 Cards in this Set

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 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 (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)