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MSU - ISE 2113 - Study Guide - Study Guide

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MSU - ISE 2113 - Study Guide - Study Guide

School: Mississippi State University
Department: Industrl & Systems Engineering
Course: Principles of Macroeconomics
Professor: Heriberto Gonzalez
Term: Fall 2017
Tags: Macroeconomics, notes, study, and guide
Name: Study Guide
Description: These are a few things to look over for the test Wednesday
Uploaded: 10/16/2017
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background image Test 2 Macroeconomics   Chapter 7 & Chapter 10 Study Guide for Test  Chapter 7 Measuring GDP  What are small differences in growth rate of the economy important ?  - Small differences in growth rate can make a huge difference to a country’s per capital GDP to  lead to large differences in living standards  What is productivity ?  - The quantity of goods and services that a worker can produce in one hour  The factors of productivity are   1. Physical capital  2. Natural resources  3. Human capital  4. Technological Knowledge  Physical Capital - The stock of equipment and structures that are used to produce goods and  services  Natural Resources - The inputs into the production of goods and services that are provided by  nature, such as land, rivers, and mineral deposits  Human Capital - The knowledge and skills that workers acquire through education, training,  and experience.  Technological Knowledge - Society’s understanding of the best ways to produce goods and  services.  Production function can be expressed in what two ways?  1. Aggregate production  2. Worker production  Constant returns to scale - If all inputs are doubled, output will be doubled  Marginal Product - Output produced with one extra unit of an input  Diminishing marginal product - The additional output produced by the last unit of input added  is smaller than the extra output that was produced by adding the second last unit of labour  Slope of the product function  √x Catch - up Effect - Ceteris paribus, poor countries grow faster than rich countries  Brain Drain - The emigration of highly trained or intelligent people from a particular country  In what ways does population growth have an effect in the economy ?  - Stretching natural resources  - Diluting the capital stock  - Promoting technological progress 
background image Chapter 10 Macro Basic Relationship  What kind of relationship exists between income and consumption and income and saving, 
other things equal? 
Direct (positive)  What are the locations of the consumption and saving schedules determined by? 
1. the expected rate of return 
2. the real rate of interest 
The investment demand curve reveals an inverse relationship between the interest rate and the 
level of aggregate investment. 
What can the shifts of the investment demand curve occur as?  The results of changes in 
1. the acquisition, maintenance, and operating costs of capital goods
2. business taxes 
3. technology 
4. the stocks of capital goods on hand 
5. expectations 
What can change the level of investment ?  Either changes in interest rates or shifts of the investment demand curve can change the level 
of investment 
What all contribute to instability of investment spending? 
1. The durability of capital goods
2. the irregular occurrence of major innovations 
3. profit volatility 
4. variability of expectations 
What happens through the multiplier effect?  an increase in investment spending (or consumption spending, government purchases, or net 
export spending) ripples through the economy ultimately creating a magnified increase in real 
GDP
What  are the nonincome determinants of consumption and saving? 
1. wealth 
2. borrowing 
3. expectations 
4. real interest rates 
What are the 2 basic determinants of investment spending? 
1. expected returns 
2. interest rates

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School: Mississippi State University
Department: Industrl & Systems Engineering
Course: Principles of Macroeconomics
Professor: Heriberto Gonzalez
Term: Fall 2017
Tags: Macroeconomics, notes, study, and guide
Name: Study Guide
Description: These are a few things to look over for the test Wednesday
Uploaded: 10/16/2017
3 Pages 39 Views 31 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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