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47 Cards in this Set

  • Front
  • Back
How many inputs are variable in the long run?
all inputs are variable
How many inputs are variable in the short run?
at least one input must be fixed for it to be considered short run
What is a real variable?
a variable that is measured in physical units
what is a nominal variable?
a variable that is measured in terms of its current dollar value
What is a long run determinate of economic growth?
Do small differences in growth rates matter?
How do we figured out the doubling time of a countries average income?

x= the growth rate expressed as a whole number
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
what is the production function?
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
Assuming constant returns to scale, if you double inputs you...?
double outputs
what is the difference of change in supply vs. change in quantity supplied?
change in supply: "shift in the Supply curve"
Change in quantity supplied: "movement along the supply curve"
what is the natural rate of unemployment and what goes into it?
The amount of unemployment that the economy experiences naturally

-frictional unemployment
-structural unemployment
what is cyclical unemployment?
year to year fluxuations in unemployment around it's natural rate
what is frictional unemployment?
unemployment that reults from the times it takes workers to search for new jobs
what is structural unemployment?
Unemployment that results from there being less jobs available then people to work those jobs
What are 3 reasons for structural unemployment?
1. Minimum wage
2. Unions and collective bargaining
3. efficiency wage
4. large charges in trades flows and partners
what is the BLS?
Bureu or Labor statistics
What are the BLS categories?
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
what is the labor force?
sum of employed and unemployed
what is the unemployment rate and how do u calculate it?
it is the percent of the labor force that is unemployed

# of unemployed
-------------------------- X 100
labor force
how do you calculate the labor force participation rate?
Labor force
----------------- X 100
what is an inward-oriented trade policy?
avoiding interaction with other countries
What is an outward-bound trade policy?
encouraging interaction with other countries.
Free trade
trade in some ways is a type of technology
How does population growth interact with factors of production?
1. stretches natural resources thin
2. diluting the capital stock
3. promoting technological progress
what is saving?
if you don't consume all your income, the rest is saved
what are the two types of people in ther world? (at least to the banks)
savers and borrowers
what is the financial system?
consists of the group institutions in the economy that help to match one persons saving with another persons investment
Financial markets?
Financial intermediaries?
-directly provide fund to borrowers
-indirectly provide funds to borrowers
what is government saving?
The amount of money that remains in the economy after paying for conosumption and government purchases.
What is government investment?
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.
what is crowding out?
a decrease in quantity of investment stemming from a budget deficit.
what is underemployment? Does the BLS keep track of it?
When a person wants to work full time but only works part time. BLS doesn't measure this when account for unemployment.
What is a discouraged worker?
one who has given up searching for work
what is shirking?
one who is intentially unemployed
Describe unemployment spells
most spells of unemployment are short. Most of the unemployent is made up of few with long bouts.
What causes structural unemployment?
1. minimum wage laws
2. efficiency wages
3. trade flow shifts
What is the unemployment equation?
Unemployment= Labor supplied- Labor demanded
Is minimum wage usually a binding price floor?
it is usually binding
Who makes up most of unemployed?
1. teenagers without highschool degrees
2. immigrants with low skill
what do unions do for labor force?
act as a monopoly for labor suppliers
what does real wage growth stem from?
1. increases in demand for labor
2. decreases in supply of labor
over that past 80 years how have real wages been affected?
real wages have grown for industrialized nations
have have real wages in the U.S. been over the last 40 years?
1. Real wages have been stagnant
2. employment has grown substantially
why has the real wage been stagnant and labor growing?
if Supply of labor icreases then labor rises and wage falls
does the demand curce increase because of stagnant productivity gains?
demand curve increases only slightly (if at all)
Why has there been real wage inequality increases?
1. Globalization
2. skill-biased techonological change