EC 309 Exam 1 OE

-8 months -Productivity only contracted for one quarter

How long did the 2001 recession last? What observations about productivity did we notice during the 2001 recession?

Investment contracted at a 50% clip during the 1973-1975 recession

Ignoring the pandemic, what is the highest rate of contraction?

11 months

Since 1950, how long does the average recession last?

2.0%

What is the average rate of productivity growth in the United States since 1960?

3.0% for GDP growth and 5.3% for investment

What is the average rate/trend rate of economic growth in the United States from 1960-2022? By comparison, what is the trend rate of growth for private domestic investment over the same timeframe?

1947 - peaked at 20%

What is the highest overall inflation rate that has occurred in the United States during the postwar period? And when?

More than 1/4 size of GDP

What is the total volume of trade relative to GDP?

Peak: 16.4% in 1978 Trough: -8.4% in 2008

What were the peaks and troughs for GDP growth?

-Profits = Total Revenues - Total Costs -Profits = P * Y - Labor Costs - Costs of Capital -Profits = pAF(K,L) - w*L - r*K -W=Wages per hour / L = # of hours / R = rental rate / K = total stock of capital

Write down and explain the expression for firm profits. How do firms choose the number of workers to hire? Be sure to explain each term in your algebraic expression.

GDP of 23 trillion

How big is the U.S economy?

The production of goods that will be used to produce other products

How do economists define investment?

1. L - Labor (Hours / # of Workers) 2. K - Equipment / Software 3. A - (Total Factor) Productivity

How do macroeconomists characterize the different factors that affect total output in the economy? Provide brief explanation.