Chapter 10 Flashcards
business cycle
alternating periods of economic expansion and economic recession
long run economic growth
the process by which rising productivity increases the average standard of living
labor productivity
the quantity of goods and services that can be produced by one worker or by one hour of work
capital
manufactured goods that are used to produce other goods and services
potential GDP
the level of real GDP attained when all firms are producing at capacity
financial system
the system of financial markets and financial intermediaries through which firms acquire funds from households
financial markets
markets where financial securities such as stocks and bonds are bought and sold
financial intermediaries
firms, such as banks, mutual funds, pension funds, and insurance companies that borrow funds from savers and lend them to borrowers
market for loanable funds
the interaction of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged
investment=
y-c-g
sprivate=
y+tr-c-t
spublic
t-g-tr
s=
sprivate + spublic
crowding out
a decline in private expenditures as a result of an increase in government purchases
TABLE 10.1
TABLE 10.1
