Macro Exam 3

Primary economic function of the financial system is to

match one person's saving with another person's investment

if a japanese country opens a new factory in south korea, it makes

a foreign direct investment. the factory will make a bigger impact on south koreas gdp than on its gnp

investment in physical capital and human capital both have what

an opportunity cost

productivity is defined as the quantity of

goods and services produced from each unit of labor input

Countries that pursued outward oriented policies in the 20th century

include singapore, south korea, and Taiwan

If there are diminishing returns to capital, then

increases in the capital stock increase output by ever smaller amounts.

In the long run, a higher savings rate

increases the level of productivity

Even though japan had a higher growth rate of real gdp per person than the U.S. over the last 120 years

its level of real gdp per person in lower than that of the U.S.

What is not an example of physical capital

knowledge of workers

Proprietary technology is knowledge that is

known only by the company that discovered it

When a country saves a larger portion of its GDP than it did before, it will have

more capital and higher productivity

Long term bonds generally have

more risk so they pay higher interest rates

The single most important piece about a stock is its

price

If the government's expenditures exceeded its receipts, it would likely

sell bonds directly to the public

A nation's standard of living is determined by

the productivity of its workers