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47 Cards in this Set
- Front
- Back
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How many inputs are variable in the long run?
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all inputs are variable
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How many inputs are variable in the short run?
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at least one input must be fixed for it to be considered short run
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What is a real variable?
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a variable that is measured in physical units
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what is a nominal variable?
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a variable that is measured in terms of its current dollar value
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What is a long run determinate of economic growth?
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productivity
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Do small differences in growth rates matter?
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yes
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How do we figured out the doubling time of a countries average income?
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70
---- x x= the growth rate expressed as a whole number |
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Y=?
L=? K=? N=? H=? A=? |
Y= outpot (or GDP)
L= number of workers (or labor hours) K=Capital Stock N= Natural resource stock H= Human K stock (skills and abilities aquired through education, training and experience) A= stock of technology |
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what is the production function?
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an equation that describes the relationship between inputs in the production process AND the outputs from production
Y=A f(L,K,N,H) f( )= function of |
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Assuming constant returns to scale, if you double inputs you...?
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double outputs
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what is the difference of change in supply vs. change in quantity supplied?
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change in supply: "shift in the Supply curve"
Change in quantity supplied: "movement along the supply curve" |
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what is the natural rate of unemployment and what goes into it?
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The amount of unemployment that the economy experiences naturally
-frictional unemployment -structural unemployment |
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what is cyclical unemployment?
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year to year fluxuations in unemployment around it's natural rate
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what is frictional unemployment?
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unemployment that reults from the times it takes workers to search for new jobs
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what is structural unemployment?
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Unemployment that results from there being less jobs available then people to work those jobs
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What are 3 reasons for structural unemployment?
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1. Minimum wage
2. Unions and collective bargaining 3. efficiency wage 4. large charges in trades flows and partners |
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what is the BLS?
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Bureu or Labor statistics
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What are the BLS categories?
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1. employed: includes all who have worked as paid employees, owned their own business or unpaid family workers part-time, full-time
2. Unemployed: not working, are available for work and have looked for work in the last four weeks (anyone over 16) 3. Out of Labor force: Retiress, college kids, housewives, or anyone who doesn't fall into categories 1 or 2 |
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what is the labor force?
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sum of employed and unemployed
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what is the unemployment rate and how do u calculate it?
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it is the percent of the labor force that is unemployed
# of unemployed -------------------------- X 100 labor force |
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how do you calculate the labor force participation rate?
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Labor force
----------------- X 100 Population |
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what is an inward-oriented trade policy?
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avoiding interaction with other countries
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What is an outward-bound trade policy?
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encouraging interaction with other countries.
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Free trade
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trade in some ways is a type of technology
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How does population growth interact with factors of production?
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1. stretches natural resources thin
2. diluting the capital stock 3. promoting technological progress |
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what is saving?
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if you don't consume all your income, the rest is saved
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what are the two types of people in ther world? (at least to the banks)
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savers and borrowers
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what is the financial system?
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consists of the group institutions in the economy that help to match one persons saving with another persons investment
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Financial markets?
Financial intermediaries? |
-directly provide fund to borrowers
-indirectly provide funds to borrowers |
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what is government saving?
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The amount of money that remains in the economy after paying for conosumption and government purchases.
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What is government investment?
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The amount of money spent on capital goods.
-typically done b firms, some by households. goal of financial system is to line up borrowers and savers. |
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what is crowding out?
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a decrease in quantity of investment stemming from a budget deficit.
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what is underemployment? Does the BLS keep track of it?
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When a person wants to work full time but only works part time. BLS doesn't measure this when account for unemployment.
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What is a discouraged worker?
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one who has given up searching for work
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what is shirking?
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one who is intentially unemployed
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Describe unemployment spells
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most spells of unemployment are short. Most of the unemployent is made up of few with long bouts.
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What causes structural unemployment?
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1. minimum wage laws
2. efficiency wages 3. trade flow shifts |
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What is the unemployment equation?
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Unemployment= Labor supplied- Labor demanded
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Is minimum wage usually a binding price floor?
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it is usually binding
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Who makes up most of unemployed?
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1. teenagers without highschool degrees
2. immigrants with low skill |
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what do unions do for labor force?
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act as a monopoly for labor suppliers
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what does real wage growth stem from?
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1. increases in demand for labor
2. decreases in supply of labor |
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over that past 80 years how have real wages been affected?
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real wages have grown for industrialized nations
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have have real wages in the U.S. been over the last 40 years?
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1. Real wages have been stagnant
2. employment has grown substantially |
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why has the real wage been stagnant and labor growing?
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if Supply of labor icreases then labor rises and wage falls
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does the demand curce increase because of stagnant productivity gains?
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demand curve increases only slightly (if at all)
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Why has there been real wage inequality increases?
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1. Globalization
2. skill-biased techonological change |
