Macroecon chapter 10 Flashcards
Ypc formula
Y/population
%ΔYpc formula
%ΔY - %ΔPopulation
Average annual growth rate of Y formula
%ΔY = [((Ym/Y0)^(1/m)) - 1] x 100
Benefits of econ growth
Better living standard (relation to GDP per capita)
%ΔGDPpc formula
%ΔGDP - %ΔPopulation
Gini index
Measure income inequality and poverty ( 1$ per day )
Limitation and cost of econ growth
Sustainability
Saving is equal to…
Investment
Private saving formula
Y* - T - C
Public saving formula
T - G
National saving formula
Yep - C - G
Total saving formula
Private saving + Public saving
Real interest rate influence on investment curve
Negative
Sales influence on investing curve
Positive
Future influence on investment curve
Positive
ΔSale on investment curve
// shift left or right
Real interest rate influence on NS curve
Positive
Potential GDP influence on NS curve
Positive
Government purchases influence on NS curve
Negative
Consumer spending influence on NS curve
Negative
If ΔYp > 0
NS curve shift // right and real interest rate ↘️
If ΔC > 0
NS curve shift // left and interest rate ↗️
If ΔG > 0
NS curve shift // left and real interest rate ↗️
Neo Classical Model
Y = f( tech, L, K, H)
Key assumptions of classical model (2)
- Diminishing marginal returns of capital of L and K
- Constant return to scale
If α+β = 1
Yz = λY1 -> constant return to scale
If α+β > 1
Increasing return to scale
If α+β < 1
Decreasing return to scale
Why is tech necessary to jump to higher level of GDP per capita growth
Increase in material living standard
Source of econ growth (4)
- Labour force
- Human capital
- Physical capital
- Technological improvement
Neoclassical growth model is a technological…
Exogenous
Other growth theory consider techno change as…
Endogenous
4 reasons for endogenous tech change
- Learning by Doing
- Knowledge Transfer
- Market Structure
- Shocks and Innovation
Neoclass: increasing marginal return of …
L and K
Limits of econ growth (3)
- Natural resources are limited
- Climate change
- Environment degredation
