Chapter 6 Flashcards
labour productivity
the quantity of goods and services that can be produced by one worker or by one hour of work
rule of 70
how long it will take for real GDP per capita to double
70/growth rate
capital
manufactured goods that are used to produce other goods and services
capital stock
the total amount of physical capital available
human capital
the accumulated knowledge and skills workers acquire from education, training, or life experience
technological change
an increase in the quantity of output firms can produce using a given quantity of inputs
potential GDP
the level of real GDP attained when all firms are producing at capacity
output gap
the percentage difference between actual GDP and potential GDP
retained earnings
profits that are reinvested in the firm rather than paid to the firm’s owners
calaculation
GDP (Y)
consumption (C) + investment (I) + government purchases (G) + net exports (NX)
calculation
private saving
income/GDP (Y) + government transfers (TR) - consumption (C) - taxes (T)
calculation
public saving
tax revenue (T) - government spending (G) - government transfers (TR)
calculation
total savings
GDP - consumption (C) - government spending (G)
expansion phase
part of the business cycle where production, employment, and income are increasing
business cycle peak
the end of the expansion phase
