2/7 lecture Flashcards
why does RGDP fall during recessions
decrease in labor
why did labor recover so slow after great recession
because of capital evolution, Firms stopped investing
extensive margin
individual:
aggregate:
(yes/no answer)
individual = employed vs not employed
aggregate = total employment
intensive margin
individual:
aggregate:
(answer with if yes, then how much)
individual:daily/monthly/annual hours
aggregate: total hours worked by the employed
what is working age
any person 15-64 years of age
employed status is
workers presently matched with a suitable eployer
unemployed is
workers searching for a suitable employer
out of the labor force is
a working age person who has stopped searching for suitable employer
impact of less people working
impacts elderly because less can be supported when they retire from social security
how has US employment rate changed over time
increase but not as fast (not steep slope)
how hasUS unemployment rate changed last 70 years
increased
persistant
structural:
frictional:
‘natural rate of unemployment’
structural: due to a persistent mismatch between supply and demand
frictional: due to the time it takes to find suitable jobs
non persistent cyclical unemployment is
related to various types of macroeconomics cycles
why has frictional unemployment dropped
because of digitizing the job market and willingness to move for a job
what is friction unemployemnt
it takes a lot of time to find good employee, openings are not filled immediately
what are factors of production
technology, capital, labor
capital is
goods that are used in the production of other goods + inventories
example of capital
machines and computers
what is the difference between capital and intermediate goods is that
capital is used in the production process whereas intermediate goods is used up in its entirery
what is capital stock
all of the countries previously accumulated capital
what is investment in econ
the production of new capital
what is the basic idea of the perpetual inventory method
interpret economies capital stock as an inventory. the stock of inventory increases with capital formation (investments)
what belongs in a production function is capital ___ _____, not capital ___ ______
in use; in place
capital in use is
capital actively used in production
capital in plac eis
capital stock
what happens to capital in use during recession
it falls because capital like machines are not being used
what does technology measure
how good an economy uses capital and labor to produce output
how do we measure technology
measure it indirectly by way of theoretical production function instead
what is the most well known production fucntion called
Cobb-douglas
why is technology or TFP often called a residiual
because it is used to explain changes in output that cannot be accounted for by capital accumulation or increased labor input
stock is
A variable that can be measured at a specific point in time and typically accumulates over time
flow is
a variake that can only be measured over an interval of time
what is income
net of taxation, output is distributed as income to either capital or labor
labor income is
wages and salaries
capital income is
interest rates and dividends
