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27 Cards in this Set
- Front
- Back
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What is the National Income Accounting Identity? What are the components?
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Y = C + I + G + NX
Y is GDP C is consumption I is investment G is government expenditures NX is Net exports - imports |
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What is another name for net exports?
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Trade Balance
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What is the expenditure approach to GDP?
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The national income accounting identity.
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What is the production approach to GDP?
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An approach to GDP where only new production accounts.
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What is the equation for the relationship of nominal and Real GDP?
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nominal GDP = price level x real GDP
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What is the Lasperyres index?
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The index where we use the initial prices of GDP (as in we adjust year 2000 to year 1980 by 1980 prices).
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What is the Paasche index?
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The index where we use the final prices of GDP (as in we adjust year 1980 to year 2000 by 2000 prices).
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What is chain-weighting GDP?
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Using the Lasperyres (initial) index and the Paasche (final) index and calculating the average of the two growth rates.
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What is the GDP deflator?
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The price level when applied to national accounts!
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Percentage change in nominal GDP is equal to....
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Percentage change in price level + Percentage change in real GDP
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Percentage change in price level + Percentage change in real GDP is equal to...
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Percentage change in nominal GDP!
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What is the percentage change in price level called?
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INFLATION RATE!
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How do you calculate the inflation rate?
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The change in the price level between two different periods in time.
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True or False? There is enormous variation in per capita income across economies.
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True
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Who are the Asian Tigers?
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The Asian Tigers: Hong Kong, Singapore, Taiwan, South Korea have really high growth rates.
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T or F? Growth rates are not generally constant over time. For the world as a whole, growth rates were close to zero most of history but have increased sharply in the 20th century. For individual countries, growth rates also change over time.
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True
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What are 4 causes of high structural unemployment?
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1) High Minimum Wage
2) Skill/Worker Mismatch 3) High Hiring & Firing Costs 4) Generous Unemployment Benefits |
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Can countries move from being rich to poor?
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A country’s relative position in the world income distribution of per capita incomes is not immutable. Countries can move from being poor to being rich and visa versa.
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What are reasons why Europe's unemployment is naturally higher?
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Higher Unemployment Insurance
Hard Labor Mobility High Firing & Hiring Costs (France) |
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Frictional Unemployment
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results when workers are changing jobs in a dynamic economy
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Structural
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deals with labor market institutions
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Cyclical
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associated with short run business cycle fluctuations, such as booms and recessions
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What happens if a new technological advance increases the demand for workers?
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The wage will rise and labor demand will shift out and labor supply will shift out to rising wage.
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Nominal wage
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W
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Real Wage
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W/Price Level
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Yt = At^1/2 * Lyt
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Output is produced using the existing stock of knowledge, which has diminishing returns.
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change in At = z * At * Lat
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New ideas are the change in At producing using existing ideas At and labor Lat.
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