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11 terms

Short answers2

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Some poor countries grow faster than the US- what is this phenomena called
convergence
as countries become richer, they spend less on food. what happens to the relative price of food?
declines
what scenario does malthusian trap refer to
a scenario where an economy is stuck with too little resources for a growing population, so the economy stagnates
why are stable political institution a necessary precondition for persistent growth?
because they guarantee property rights and thus incentivise innovation
name the three stages of technological progress
invention, innovation, diffusion
what is the nairu
the non accelerating inflation rate of unemployment, refers to the medium run or natural unemplyment rate at which inflation stays constant
what happens to the unemployment rate if the participation rate declines and employment remains the same
declines
what does lucas critique refer to
policies that do not take into account the response of private agents are ineffecive
the intersection of the AS and AD curve denotes the medium run equlibrium..is this statement correct?
no, expected prices have to equal actual prices
what does monetary neutrality mean
monetary variable has no effect on real variables in the medium run, monetary policy cannot impact real variable in the medium run
name two functions of money
means of transactions, store of value, for speculation purposes