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23 Cards in this Set
- Front
- Back
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Productivity is defined as |
The quantity of goods and services produced from each unit of input |
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Country A population: 1,000 800 work for 8hr/day for 128,000 final goods. Country B population: 2,000 1,800 work 6hr/day for 270,000 final goods. |
Country A has a lower productivity and a lower GDP than country B |
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Sonya produces 8 goods in 8 hours and Emma produces 9 goods in 10 hours |
Sonya's productivity is higher than Emma's |
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Human capital is the |
Knowledge and skills that workers acquire through education, training, and experience. |
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In a market economy, we know a resource has become scarcer when |
The demand for a good increases while supply decreases |
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If a nation's production function has constant returns to scale, if inputs were doubled outputs would |
double |
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What's the relationship between natural resources and economic growth |
Natural resources can make a country rich, but you do not need natural resources in order to be rich. |
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Production function= Y=Af(L,K,H,N)
What is K |
Physical capital only |
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Countries with political instability have a low standard of living because |
Lack of respect for basic property rights |
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The primary economic function of the financial system is to |
provide expert advice to savers and borrowers |
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All other things equal, what are long term bonds in relation to short term bonds, riskiness, and interest rates |
Long term bonds are more risky than short term bonds so they have higher interest rates |
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If national saving in a closed economy is less than 0, then |
Investment is negative |
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Closed economy with 3 tril private saving and 2 tril public saving. What is national saving/investment? |
5 tril saving, 5 tril investment |
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If you put $350 in the bank today, interest paid is 6%. What is the future value of your money in 4 years? |
350(1.06)^4= $441.87 |
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The future value of a deposit in a savings account will be larger... |
The longer a person waits to withdraw The higher the interest rate The larger the initial deposit |
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When IR increases, present value of future revenues from investment projects... |
falls, so investment spending falls |
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Financial intermediaries typically require mortgage borrowers to have homeowners insurance and do credit checks before making the loan because... |
The insurance requirement is designed to reduce the risk of moral hazard and the credit check is used to reduce adverse selection |
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All other things the same, as the number of stocks in a portfolio increases |
risk decreases and the standard deviation of the return decreases |
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Money... |
is more efficient than barter makes trade easier allows for greater specialization |
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If a bank has a reserve ratio of 8%, then |
The bank keeps 8% of its deposits as reserves and loans out the rest |
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An increase in the velocity of money means that |
The rate at which money changes hands increases, so price level rises |
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Your boss gives you an increase in the number of dollars you earn per hour, this increase in pay does what to your nominal and real wages |
Your nominal wage increases, and if your nominal wage increases by a greater % than the price level, your real wage also increases |
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According to the assumption of the quantity theory of money, if money supply increases by 5%, then |
nominal and real GDP would also increase by 5% |
