economics 21 and 22

the process by which the rising productivity increases the standard of living

the quantities of goods and services that can be produced by one worker or one hour of work

manufactured goods that are used to produce other goods and services

the level of real gdp attained when all firms are producing at capacity

the system of financial markets and financial intermediaries through which firms aquire funds from households

markets where financial securities, such as stocks and bonds, are bought and sold

firms, such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers

the interaction of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged

a decline in the private expenditures as a result of an increase in government purchases

the application of mechanincal power to the production of goods, beggining in england around 1750

a lodel that explains the rate of growth in real GDP per capita over the long run

a change in the quantity of output a firm can produce using a given quantity of outputs

the accumilated knowledge and skills that workers require from education and training or from their life experiences

the relationship between real GDP per hour worked and capital per hour worked, holding the level of technology constant

a model of economic growth that emphasizes that technological change is influenced by economic incentives and so is determined by the working of the market system

the exclusive right to produce a product for a period of twenty years from the date the product is invented

the prediction that the level of GDP per capita (or income per capita) in poor countries will grow faster than in rich countries

the rights individuals or firms have to the exclusive use of thier property, including the right to buy or sell it

the ability of a gvmt to enforce the laws of the country, particularly with respect to protecting private property and enforcing contracts

the purchase of a building by a corporation of a facility in a foreign country

a purchase by an individual or a firm of stocks or bonds issued in another company

the process of countries becoming more open to foreign trade and investment

• leading
• concurrent
• lagging

• helps predict what happens:
• building permits
• consumer confidence index
• new orders for capital equipment

• change at same time as economy:
• GDP

• changes after economy:
• unemployment

theory of business cycle, first attemot to understand. jevons

schumpeter; "creative destruction" innovation to spin offs to decline

income/wealth increasingly concentrated; less consumer spending

focus on investment spending; very inpredictable. depends on " animal spirit" need gvmt push.

income held back from spending on consumer goods

using funds saved to purchase capital (or produce) goods

resources held back from producing consumer goods

same resources are used to produce capital goods

• interest rates
• expected profits

annual profit divided by amount invested; return on investment

technological change increases the demand for loanable funds

gvmt begins running budget deficit; crowding out

• higher oil prices
• regulation
• longterm shift from manufacturing to services