economics 21 and 22

  1. long run economic growth
    the process by which the rising productivity increases the standard of living
  2. labour productivity
    the quantities of goods and services that can be produced by one worker or one hour of work
  3. capital
    manufactured goods that are used to produce other goods and services
  4. potential GDP
    the level of real gdp attained when all firms are producing at capacity
  5. financial system
    the system of financial markets and financial intermediaries through which firms aquire funds from households
  6. financial markets
    markets where financial securities, such as stocks and bonds, are bought and sold
  7. financial intermediaries
    firms, such as banks, mutual funds, pension funds, and insurance companies, that borrow funds from savers and lend them to borrowers
  8. market for loanable funds
    the interaction of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged
  9. crowding out
    a decline in the private expenditures as a result of an increase in government purchases
  10. industrial revolution
    the application of mechanincal power to the production of goods, beggining in england around 1750
  11. economic growth model
    a lodel that explains the rate of growth in real GDP per capita over the long run
  12. technological change
    a change in the quantity of output a firm can produce using a given quantity of outputs
  13. human capital
    the accumilated knowledge and skills that workers require from education and training or from their life experiences
  14. per-worker production function
    the relationship between real GDP per hour worked and capital per hour worked, holding the level of technology constant
  15. new growth theory
    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
  16. patent
    the exclusive right to produce a product for a period of twenty years from the date the product is invented
  17. catch-up
    the prediction that the level of GDP per capita (or income per capita) in poor countries will grow faster than in rich countries
  18. property rights
    the rights individuals or firms have to the exclusive use of thier property, including the right to buy or sell it
  19. rule of law
    the ability of a gvmt to enforce the laws of the country, particularly with respect to protecting private property and enforcing contracts
  20. foriegn direct investment
    the purchase of a building by a corporation of a facility in a foreign country
  21. foreign portfolio investment
    a purchase by an individual or a firm of stocks or bonds issued in another company
  22. globalization
    the process of countries becoming more open to foreign trade and investment
  23. economic indicators of business cycles
    • leading
    • concurrent
    • lagging
  24. leading
    • helps predict what happens:
    • building permits
    • consumer confidence index
    • new orders for capital equipment
  25. concurrent
    • change at same time as economy:
    • GDP
  26. lagging
    • changes after economy:
    • unemployment
  27. sunspot theory
    theory of business cycle, first attemot to understand. jevons
  28. longwave theory
    schumpeter; "creative destruction" innovation to spin offs to decline
  29. marxian theory
    income/wealth increasingly concentrated; less consumer spending
  30. keynesian theory
    focus on investment spending; very inpredictable. depends on " animal spirit" need gvmt push.
  31. financial saving
    income held back from spending on consumer goods
  32. financial investment
    using funds saved to purchase capital (or produce) goods
  33. resources saving
    resources held back from producing consumer goods
  34. resources investment
    same resources are used to produce capital goods
  35. investment spending effected mainly by:
    • interest rates
    • expected profits
  36. expected return
    annual profit divided by amount invested; return on investment
  37. demand shift in something
    technological change increases the demand for loanable funds
  38. supply of loanable funds reduced:
    gvmt begins running budget deficit; crowding out
  39. reasons for productivity slow down in 70s and 80s
    • higher oil prices
    • regulation
    • longterm shift from manufacturing to services
Card Set
economics 21 and 22
chapter 21 and 22