Term
| Determinants of long run growth |
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Definition
Real GDP Per Capita
Capital per hour worked
Technological Change |
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Term
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Definition
| level of GDP attained when all firms are producing at capacity (full employment) |
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Term
| savings must be equal to investment in the long run |
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Definition
I = S
Y-C-G = Sprivate + Spublic
Y-C-G = (Y +TR- C- T) + (T-G-TR)
Y-C-G = Y-C-G
S=I
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Term
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Definition
| is the interaction of borrowers and lenders that determines the market interest rate and the quantity of loanable funds exchanged |
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Term
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Definition
| determined by the willingness of firms to borrow money to engage in new investment projects. Firms compare the returns they expect to make on investment |
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Term
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Definition
| determined by the willingness of households to save and by the extent of government savings or dissaving. |
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Term
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Definition
WHEN HOUSE holds save, they redue the amount of good and services they can consume and enjoy today.
Higher the interest rate, the greater/more likely HH are going to save. This supply curve is upward sloping becaue the higher the interest rate, the greater the quantity of saving supplied. |
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Term
What does equilibrium determine in the LFM
Loanable Funds Market |
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Definition
| determines the real interest rate rather than the nominal interest rate. |
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