Macro Interim Flashcards
Basic Understanding of Functions and Vocab
National Income Identity (Y = C + I + G + NX)
GDP = Consumption + Investment + Government Purchase + (exports-imports)
GDP = Consumption + Investment + Government Purchase + (exports-imports)
National Income Identity (Y = C + I + G + NX)
Nominal GDP
(price level)(real GDP)
(price level)(real GDP)
Nominal GDP
L-Index
Computation in Change of Real GDP with initial prices
Computation in Change of Real GDP with initial prices
L-Index
P -Index
Computation in Change of Real GDP with final prices
Computation in Change of Real GDP with final prices
P -Index
Chain Weighting
average of L-Index and P-Index
average of L-Index and P-Index
Chain Weighting
Growth Rate (percentage change per capita)
(Yt+1 - Yt ) / Yt
(Yt+1 - Yt ) / Yt
Growth Rate (percentage change per capita)
Level of Per Capital Income
Y(t+1) = Yt(1+g)
Y(t+1) = Yt(1+g)
Level of Per Capita Income
Constant Growth Rule
Yt = Yo(1+g)t
Yt = Yo(1+g)t
Constant Growth Rate
Standard Scale when graphed looks like
exponential growth
Ratio Scale when graphed looks like
a straight line, linear.
Computation of Growth Rate
g(constant) = (Yt / Yo)1/t - 1
g(constant) = (Yt / Yo)1/t​ - 1
Computing growth rate
Growth rate of ratio: z =x/y
gz = gx - gy
gz = gx - gy
Growth rate of ratio: z = x/y
Growth rate of ratio: z =(x)(y)
gz = gx + gy
gz = gx + gy
Growth rate of ratio: z =(x)(y)
Growth rate of ratio: z = xa
gz = (a)(gx)
gz = (a)(gx)
Growth rate of ratio: z = xa
Production Function: K = machine; L = workers
Y = F(K, L) = A(K1/3)(L2/3)
Y = F(K, L) = A(K1/3)(L2/3)
Production Function: K= machine; L = workers
Paramter
Input that is generally fixed over time
Input that is generally fixed over time
Paramter
Exogenous Variable
INPUT that is allowed to change over time but determined aheaded of time. (POPULATION)
INPUT that is allowed to change over time but determined aheaded of time. (POPULATION)
Exogenous Variable
Endogenous Variable
OUTCOME (determined by supply and demand)
OUTCOME (determined by supply and demand)
Endogenous Variable
Potential Output
Measurment of per capita GDP evolvement if prices are completely flexible and resources fully employed
Measurment of per capita GDP evolvement if prices are completely flexible and resources fully employed
Potential Output
Economic Profit
Total Revenue minus Total payments for INPUT
Total Revenue minus Total payments for INPUT
Economic Profit
Accounting Profit
Revenue minus Payment to labor
Revenue minus Payment to labor
Accounting Profit
output per person in equilibrium
y*= (A-bar)(K1/3)
y*=(A-bar)(K1/3)
output per person in equilibrium
(A-bar)
Productivity Parameter (Total Factor of Production/Residual)
Productivity Parameter (Total Factor of Production/Residual)
(A-bar)
Law of Diminishing Return
All inputs held constant and 1 input increases and tend to a large number, increasing of output diminishes
All inputs held constant and 1 input increases and tend to a large number, increasing of output diminishes
Law of Diminishing Return
Human Capital
Stock or skills that individuals accumulate to make them more productive
Stock or skills that individuals accumulate to make them more productive
Human Capital
Solow Growth Model
Turning exogenous variables into endogenous variables, where capital is accumulated over time
Turning exogenous variables into endogenous variables, where capital is accumulated over time
Solow Growth Model
Capital Accumulation
Kt+1 = Kt + It - (d-bar)Kt
Inital Capital(t) + investment used for production(t) -depreciation
Kt+1 = Kt + It - (d-bar)Kt
Inital Capital(t) + investment used for production(t) -depreciation
Capital Accumulation
Steady-State level of Capital
y* = ((s-bar)(A-bar) / (d-bar))3/2 (L-bar)
y* = ((s-bar)(A-bar) / (d-bar))3/2 (L-bar)
Steady-State level of Capital
Steady-State level of Production
y* = (A-bar)3/2(s-bar/d-bar)1/2​ (L-bar)
y* = (A-bar)3/2(s-bar/d-bar)1/2 (L-bar)
Steady-State level of Production
Investment Equation
(Share of Output for investment) - (weighting diff of real interest and MPK)(MPK)
(Share of Output for investment) - (weighting diff of real interest and MPK)(MPK)
Investment Equation
Nominal
Valued at Current Price
Valued at Current Price
Nominal