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24 Cards in this Set
- Front
- Back
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Lorenz curve
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shows what percent of household owns what percent of gdp; it is below the line of perfect equality, therefore the bottom 20% of household gets about 10% of wealth
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gini coefficient
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measures inequality
the % between perfect equality and the lorenz curve the higher the gini, the more inequality there is the lower the gini, the less inequality there is if high gdp and high gini, then rich well off and poor really badly off can be misleading: if the rich have equal portion of GDP, then the gini is small, but this doesnt mean that the poor have the same percentage |
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stock
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variable measured at one specific time
discrete H20 in bath water at specific time |
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flow
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look at over an interval of time
look at water coming into the bath and the water coming out of it |
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purchase power parity
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uses the exchange rate of 2 countries to equalize the purchase power
its the number of goods/services that can be purchased with a unit of currency --account for living and inflation rates, the PPP changes when there is inflation |
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the problems with PPP
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there are non-tradeable goods like haircuts
a haircut in the US should cost the same as a haircut in india, but because our GDP is higher, then a haircut in the US more expensive so absolute PPP doesnt really work make it more relative |
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relative PPP
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If inflation rates in canada rise, then the absolute difference between a haircut in canada and US will be higher, but their relative position to one another will not change
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per capita
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per head/ per person
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capital
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human made resources that are used to create goods and services
a factor of production infrastructure, buildings, machines |
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goods and services
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goods: anything
servicesL anyone wants or needs. duties for professional activity |
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GDP
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price of how much a country spends on goods and services that are produced within that country
consumer + investment + government spending +value of exports MINUS imports basically: it is everones private spending and the governments spending and the investments in capital minus the imports we get |
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production function
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converts factors (inputs) into a commodity (outputs)
take: raw material, capital, physical capital, labor and turn it into some commodity |
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marginal productivity
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least amount of inputs for an output
good thing |
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law of diminishing returns
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as imput increases, the productivity rate will decrease
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marginal production of labor
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its how much you invest in teaching labor how to make outputs
want least amount, so that they will work the most cant upset this balance though, then ppl wont work |
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relative growth rates
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predicted v. the actual
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savings
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stock piling
high demand, have back up give up current cash in order to benefit later pay for storing |
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intercountry inequality
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look at mean income
problem because there are countries whose populations are so huge, so there actual wealth per person is smaller--more unequal |
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International inequality
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measure GDP/ capita: take population into account
this doesnt account for the inequality within the country--dosnt look at how the wealth is distributed |
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global inequality
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take in all of the factors, very hard to find an effective measure of this
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trends in international inequality (between country inequality)
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general closing the gap, thanks in large part to china and india
without them, this would not be the case |
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trends with within-country inequality
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increasing: there is bigger gaps between the poor and the rich in specific country
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industrial revolution's effects on inequality
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heightens inequality
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absolute poverty
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$1, $2 per day
doesnt take in inflation rates $1/day in 1994 is not the same as in 2009, havent changed numbers yet |
