MacroEconomics 20.1
EX: of Future Value Growth rate equation
Future Value= 1.67 x (1+0.028)^5=1.92 trillion
Future Value Growth rate equation
Future Value= Present Value x (1+g)^n
GDP at end date equation
GDP at starting date x (1 + growth rate of GDP)^years= GDP at end date
What is excluded from the U.S productivity per worker measure?
Government workers (their output is not sold in the market and so their productivity is hard to measure.); Farming (accounts for only a relatively small share of the U.S. economy.)
Do Economists believe that the single most important factor in labor productivity is the quantity of available labor?
No, Economists don't believe that quantity is the most important. They believe that quality is the most important factor in labor productivity
In an aggregate production function, is the GDP commonly a primary input to production?
No, GDP is the output of the function, not an input.
How are compound growth rates and compound interest rates related?
The formula for growth rates of GDP over different periods of time, is exactly the same as the formula for how a given amount of financial savings grows at a certain interest rate over time
technological change
a combination of invention—advances in knowledge—and innovation
What does a Microeconomics production function describes what?
a firm's, or perhaps an industry's, inputs and outputs.
invention
advances in knowledge
EX: of GDP end date equations
an economy that starts with a GDP of 100 and grows at 3% per year will reach a GDP of 209 after 25 years; that is, 100 (1.03)^25 = 209.
Failure to pay an employee who performs services agreed upon is known as a violation of...?
contractual rights
What is the Measure of U.S productivity per worker
dollar value per hour the worker contributes to the employer's output.
legal system
governs and sustains property rights and contractual rights, and is an important contributor to a healthy economic climate.
What is a critical role of studying the framework of a country's economic growth?
institutional framework
Property Rights
legal rights of ownership on which others are not allowed to infringe without paying compensation
An aggregate production function can be thought of as a(n) _______________ production function.
macroeconomic; we call the connection from inputs to outputs for the entire economy an aggregate production function or a macroeconomic production function.
Innovation
putting advances in knowledge to use in a new product or service
contractual rights
rights based on property rights that allow individuals to enter into agreements with others regarding the use of their property providing recourse through the legal system in the event of noncompliance.
Human capital
the accumulated skills and education of workers
production function
the process whereby a firm turns economic inputs like labor, machinery, and raw materials into outputs like goods and services used by consumers
aggregate production function
the process whereby an economy as a whole turns economic inputs such as human capital, physical capital, and technology into output measured as GDP per capita
compound growth rate
the rate of growth when multiplied by a base that includes past GDP growth
labor productivity
the value of what is produced per worker, or per hour worked (sometimes called worker productivity)
Sustained long-term economic growth comes from increases in...?
worker productivity
