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  1. LR trend output growth originates in…?
    growth in prdouctivity, capital, and labor
  2. SR fluctuations, expansions & recessions…causes?
    output declines, firms lay off workers, and firms go out of business
  3. Causes… of economic growth
    economys resources (labor and capital) and productivity
  4. Trend changes over time…see
    Figure 10.2
    the trend of growth changed over the years on figure 10.2
  5. Key variables in LR growth, as discussed
    earlier, are
    labor force and capital
  6. The growth of labor supply
    can be measured by…? See Figures 10.3
    & 10.4
    us labor force participation rate, and population labor force and employment
  7. Labor
    • a measure of productivity per worker calculated as:
    • output/#hours worked
  8. What is a business cycle
    the short term movement of output and otherkey economic variables around their long term trends
  9. expansion
    the state of the ecoomy in which expansion is rising, alongwith other key variablessuch as income and employment
  10. peak
    the end of an expansion, when output income and employmentbegin to decline
  11. recession
    a period when output income and employment are declining
  12. trough
    the endof a recession when output income and employment begin to rise
  13. CAUSES of business cycles
    • erratic growth of of the money supply
    • swings of optimism and pessimism
    • sudden changes in productivity growth
    • changes in key factors such as oil
  14. what affects consumption?
    income, wealth, taxes, interest rate
  15. what affects investment?
    income, wealth, taxes, interest rate
Card Set
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