Ch. 4, 5, 25 Macro
Terms
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- Physical capial
- the stock of equipment and structures that are used to produce goods and services
- productivity
- the amount of goods and services produced from each hour of a worker's time
- Human capital
- the knowledge and skills that workers acquire through education, training, and experience
- Natural resources
- the inputs int othe production of goods and services that are probided by nature, such as land, rivers, and mineral deposits
- technological knowledge
- society's understanding of the best ways to produce goods and services
- diminishing returns
- the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases
- catch-up effect
- the property whereby contries that start off poor tend to grow more rapidly than countries that start of rich
- aggregation
- combining many individual markets into one overall market
- recession
- a period of time during which production falls and people lose their jobs
- Nominal GDP
- calculated by valuing all ouputs at current prices
- Real GDP
- calculated by valuing outputs of different years at common prices
- stagflation
- inflation that occurs while the economy is growing slowly
- Potential GDP
- the real GDP the economy would produce if its labor and other reources were fully employed
- structural unemployment
- workers who have lost their job because their skills are no longer in demand
- cyclical unemployment
- rises when real GDP grows more slowly than potential GDP; falls when its opposite
- frictional unemployment
- due to normal turnover in the labor market--people in between jobs, etc.
- real rate of interest vs. nominal
- nominal doesnt account for inflation