Create an account
The consumer price index is used to
Turn dollar figures into meaningful measures of purchasing power
The introduction of the video cassette recorder in the 1970s exemplified a problem in measuring the cost of living, that problem is the problem is the problem of
Introduction of new goods
The inputs into production of goods and services that are provided by nature, such as land, rivers, and mineral deposits are called
What would increase productivity?
An increase in physical capital stock, human capital, or natural resources per worker
This declines as the quantity of the input increase. Input goes up, out goes down
When Chile experiences investment from abroad, it experiences, as a result
An increase in productivity
When a country saves a larger portion of its GDP than it did before, we will have
More capital and higher productivity
The primary economic function of the financial system is to
Match saving of one person with investment of another
Other things the same, bonds are likely to have higher interest rates if they have
No tax exemptions and long terms
A mutual fund
Is an institution that sells shares to the public and uses the proceeds to buy a selection of various types of stocks, bonds, or both stocks and bonds
Total income in the economy that remains after paying for consumption and government purchases
In the loanable funds model, an increase in an investment tax credit would create a
Shortage at the former equilibrium interest rate. This shortage would lead to a rise in the interest rate
In the first part of the decade that began in 2000, the US government went from a surplus to a deficit. Other things the same, this means the
Supply of loanable funds shifted to the left
The labor force participation rate measures the percentage of
Total adult population that is in the labor force
Satchel loses his job and immediately begins looking for another. Other things the same, the unemployment rate
Increases and the labor force participation rate is unaffected
Frictional unemployment results from
Job searching, it is often thought to explain relatively short spells of unemployment
Results from the number of job available in some labor markets, longer spells of unemployment, wages are for some reason set above the equilibrium level
Minimum wage laws and unions are similar to each other but different from efficiency wages in that minimum wage law and unions
Prevent firms from lowering wages in the presence of a surplus of workers
Set of assets in economy, people regularly use, used to buy goods and services from other peopl
Federal reserve (FED)
The central bank of the US, purpose is to ensure the health of the nations banking system
Institution designed to oversee the banking system, regulate the quantity of money in the economy
He quantity of money available in the economy determines the price level (the value of money) and growth rate in quantity of money available determines the inflation rate
Quantity theory of money
Variables measured in physical units (relative prices, real wages, real interest rate)
Velocity of money
V= (price X real GDP)/ quantity of money
V= (P X Y) / M
Rate at which money changes hands
-Quantity of money X velocity of money= P X Y
-Dollar value of the economy's output of goods and services (PXY)
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