Summary
Summary EKN120 Chapter 15: Macroeconomic Objectives
- Course
- Institution
- Book
These notes cover all the concepts of chapter 15 in EKN120, namely: - economic growth - business cycle - unemployment - inflation - Income inequality
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Economics 110 Chapters 1,2,3,4,5,7,8,9
-
EKN120 Summary Notes (Ch16 - Ch20)
-
EKN110 Summary Notes (Ch4 - Ch7)
Seller
Follow
amywallace
Reviews received
Content preview
Macroeconomic ObjectivesChapter 15
Economic Growth • Efficient financial institution.
(1) Outward shift in PPC that results Channel household savings 2 buss,
from increase in resource supplies entrepreneurs & inventors that do
/quality/improvement most of society's investing &
in technology; inventing. Banks, stock & bond
(2) Increase of real output (gross markets = crucial 2 modern eco
domestic product)/real output per growth.
capita. • Literacy & widespread education.
• Increase in Real GDP Need scientists & inventors 2
• Increase in Real GDP Per Capita develop new technology & need
(Inflation-adjusted output per highly educated workforce 2 put
person; real GDP/population) technologies in2 productive use.
Growth = common eco goal: • Free trade. Promotes growth by
• Expansion of total output relative 2 allowing countries 2 specialize
population results in rising real therefore various types of outputs
wages & incomes & higher standard = produced in countries w/h can be
of living. made @ lowest opp cost. Promotes
• Growth lessens burden of scarcity. rapid spread of new ideas so
Arithmetic of Growth – Rule of 70 innovations made in 1 country
• method 4 determining # of years quickly spread 2 other countries
take 4 some measure 2 double, • Competitive market system. Price
given its annual percentage & profit servers = signals that tell
increase. firms what & how much 2 make
• Example: determine # of years Main Sources of Growth
4 price level 2 double, divide 70 by Supply: Any increases or improvements
annual rate of inflation. in these supply factors will increase
the potential size of an economy GDP:
• Increase quantity & quality of
Institutional structures that promote natural resources.
economic growth: • Increase in quantity & quality of
• Strong property rights. Not human resources.
invested believe thieves & govts • Increase in supply of capital goods.
will steal investments/expected • Improvements technology.
returns. Demand Factor: 2 achieve higher
• Patents and copyrights. B4 production potential created w/e
copyrights investors ideas be supply factors increase/improve ,
stolen. By giving exclusive rights 2 households, buss & govts must also
market & sell creations provide expand purchase of g/s 2 provide
strong financial incentives 2 invent market 4 all the new output that can
& create. be potentially produced.
, W/e demand condition = met, no Modern Economic Growth
unplanned increases in inventories, &
Uneven Distribution of Growth
rescs remain fully employed. Demand Read p171
factor acknowledges eco growth reqs Catching up = possible
increases in total spending 2 realize • Can adopt technology quicker than
upward gains made possible by can invent it.
increased production capacity. • Poorer countries = grow faster
Efficiency factor: eco achieve because can adapt (rather than
economic efficiency in addition 2 full reinvent) existing technologies.
employment if is 2 maximize amount of Is growth desirable & sustainable
satisfaction/utility can be derived – Antigrowth view:
from scarce resources. • Causes pollution, climate change,
• 2 maximize well-being use rescs in extinction and other environmental
least costly way (productive problems.
efficiency) 2 produce specific mix • Inputs in production process re-
of g/s that maximize people's entre environ as waste.
utility (allocated efficiency). • Read p171
• Unemployment caused by – In defense of eco growth:
inefficient total spending (demand • Believe growth path 2 greater
factor) may lower rate of new material abundance & higher living
capital accumulation (supply factor) standards desired by vast majority
& delay expenditures on research of people.
(supply factor). • Improve infrastructure, enhance
• Conversely lower spending on care of sick & elderly, provide
investments (supply factor) may access 4 disabled & provide more
cause insufficient spending police & Fire Protection.
(demand factor) & unemployment. • Read p177
• Widespread inefficiency & use of
resources (efficiency factor) may =
The Business Cycle
higher cost of g/s & lower profits, Recurring increases & decreases in
may slow innovation & reduce level of eco activity over periods of
accumulation of capital (supply years; consists of peak, recession,
factors). trough & expansion phases.
Labor & productivity: increase real
output & income in 2 ways
1. Increasing inputs of resources.
2. Raising the productivity of inputs.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller amywallace. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.65. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now