CAS EC 102 Chapter Notes - Chapter 10-12: Business Cycle, Longrun, Human Capital
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23 Jul 2018
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Labor productivity: the quantity of goods and services that can be produced by one worker or one hour of work. Capital: manufactured goods that are used to produce other goods and services, human capital- accumulated knowledge and skills workers acquire from education, training, or other life experiences. Best measure of a country"s standard of living is its level of real gdp per capita. Economic growth occurs when real gdp per capita increase, thereby increasing the country"s standard of living. 3 main sources: better machinery and equipment, better means of organizing and managing production increases in human capital. Aggregate expenditure (ae: the total amount of spending in the economy. Macroeconomic equilibrium: occurs when total spending=total production, [aggregate expenditure=gdp, assuming the economy is not growing, therefore equilibrium. Gdp will not change unless ae changes inventories are unchanged and there is macroeconomic equilibrium. The consumption function decline a little: relationship between consumption spending and disposable income, consumption is a function of disposable income.
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