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LR trend output growth originates in…?
growth in prdouctivity, capital, and labor
-
SR fluctuations, expansions & recessions…causes?
output declines, firms lay off workers, and firms go out of business
-
Causes… of economic growth
economys resources (labor and capital) and productivity
-
Trend changes over time…see
Figure 10.2
the trend of growth changed over the years on figure 10.2
-
Key variables in LR growth, as discussed
earlier, are
labor force and capital
-
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
-
Labor
productivity!!!!
- a measure of productivity per worker calculated as:
- output/#hours worked
-
What is a business cycle
the short term movement of output and otherkey economic variables around their long term trends
-
expansion
the state of the ecoomy in which expansion is rising, alongwith other key variablessuch as income and employment
-
peak
the end of an expansion, when output income and employmentbegin to decline
-
recession
a period when output income and employment are declining
-
trough
the endof a recession when output income and employment begin to rise
-
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
-
what affects consumption?
income, wealth, taxes, interest rate
-
what affects investment?
income, wealth, taxes, interest rate
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