Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Macro > chapter 6 > Flashcards

chapter 6 Flashcards

1
Q

when you want to find the real gdp per capita ANNUAL growth rate, what is the first step?

A

identify how many years of a difference there is

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is the rule of 70 used for?

A

estimating the number of years it takes for an investment or your money to double.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what is the formula for finding how long it will take to double a countries income?

A

70/growth rate%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

if you want to know how long it will take for a country to double it’s income, what do you do?

A

rule of 70

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

is a one shot increase in GDP = economic growth?

A

nope

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

economic growth is the sustained year to year increase in __ GDP

A

potential GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Economic growth occurs when __ increases

A

real GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

in order to have an increase in Real GDP we need an increase in ___

A

potential GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

if we have a higher Real GDP than our potential GDP this can lead to what and why

A

burn out because we are doing more than we are capable of

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

if our potential GDP is not growing, what will this lead to

A

leads to our real gdp not growing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

potential GDP is defined as

A

the capability of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

potential gdp depends on

A

how much resources/inputs we can use

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

our standard of living depends on

A

how much we consume

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

output depends on

A

our inputs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what does Capital mean?

A

goods used in the production process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

give an example of capital

A

computers (for coding a biz) or tractors (for using corn to sell)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

when goods are used to produce other goods, this is known as

A

capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what are the 4 productive resources of an economy?

A
  1. labour 2. capital 3. land 4. entrepreneurship
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

the aggregate production function shows the amount of ___ that could be produced by various quantities of __

A

output/production; labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

the aggregate production function exhibits __

A

diminishing returns to labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

as the labour increases in the aggregate production function

A

as labour increases, production produces less and less compared to previous units (diminishing returns)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

in regards to the aggregate production function: a graph is concave rather than straight line because of

A

diminishing returns to labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

aggregate production function: “moving along the line” refers to what?

A

a change in the size of labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

to find the labour productivity:

A

you divide real GDP (Y) by Labour (L)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

as more labour is used, Aggregate output ___ but output per unit of labour ___

A

increase; decrease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

an increase in human capital means?

A

you have a more educated team/humans have more skills

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

what happens when capital stock, human capital, and technology improves?

A

increase in labour productivity

28
Q

what are the three questions you ask when looking at the aggregate labour market? and what are the answers

A

who are the demanders for labour?: firms who are the suppliers?: households what is the price?: real wage rate

29
Q

what is the formula for real wage?

A

nominal wage/price level

30
Q

what does price level mean?

A

average of current prices across the entire spectrum of goods and services produced in an economy.

31
Q

what are the two things that suppliers of labour are thinking about?

A
  1. what is the wage, and 2. what can I buy with it
32
Q

price in the labour market is the

A

real wage rate

33
Q

when there is a change in real wage, what does it effect and what does it not effect

A

it affects the nominal wage, but does not effect the price level

34
Q

what is a basic behaviour of demanders for labour?

A

the lower the wage the more hours of labour demanded

35
Q

what do you put on the x and y axis of the demand for labour curve

A

on the x axis is L for labour, on the y axis, it is real wage

36
Q

the curve for the demand for labour is

A

downward sloping

37
Q

demand for labour curve: the points on the line represent the

A

real wage rate

38
Q

for an improvement in production, what will happen to the demand curve

A

it will shift to the right

39
Q

if buyers require less labour, what happen to the demand curve?

A

it will shift to the left

40
Q

what are the factors the increase the demand for labour

A

capital human capital better tech

41
Q

anything that affects your production function will also affect your

A

demand for labour

42
Q

if there is an earthquake, and capital stock goes down, what will happen to the demand for labour and why

A

shift the curve to the left because there is less capital to work with

43
Q

an increase in productivity increases demand by 10 units, how would this affect the demand schedule and the graph

A

at every unit of hours of labour demanded, it increases by 10

44
Q

why is the most people supplied for the highest wage?

A

because the higher the wage the more it is as a incentive to attract more people

45
Q

do you draw a new supply curve if there is a change in the real wage rate?

A

no, just move along the line

46
Q

a change in the real wage causes a ___ the supply curve

A

movement

47
Q

a movement along the supply curve is indicative of what

A

a change in the real wage

48
Q

what are the factors the effect the supply of labour?

A

population # of hours worked on average

49
Q

real wage above the equilibrium creates a surplus in the labour market, the real wage will fall/rise?

A

falls

50
Q

real wage below the equilibrium creates a

A

shortage

51
Q

a shortage in the aggregate market leads to a __ in real wage

A

rise

52
Q

equilibrium level of employment is also called __

A

full employment

53
Q

one way to find the potential GDP is to find the

A

equilibrium of the aggregate economy

54
Q

if aggregate employment goes up, what will happen to potential gdp

A

its gonna go up

55
Q

increase in labour =

A

increase economic growth

56
Q

an increase in population has two noticeable things related to the production function curve

A
  1. it increases the production output 2. output per hour falls (diminishing returns)
57
Q

when there is an increase in the population, does this increase economic growth? explain

A

no, because even though potential GDP has gone up, output per hour has fallen

58
Q

in order to have economic growth, there must be

A

an increase in technology, a increase in human capital, and capital

59
Q

what is the premise of economic growth?

A

every unit of labour is more productive

60
Q

I have better computers/ more human skill/ better tractors, this means I have

A

better output per hour / economic growth

61
Q

how is an increase in economic growth represented on the production function curve?

A

shifts to the left

62
Q

this is due to:

A

increase in output per person. Ie: better tech, better human capital, better capital

63
Q
A
64
Q
A
65
Q

if the labour is more productive, firms will

A

hire more at every wage rate

66
Q

if the demand for labour goes up, what happens to the wage rate (try and draw this in your head)

A

the average wage rate goes up

Macro (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions