Chapter 21: Problem 3
What two key factors cause labor productivity to increase over time?
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Key Concepts
These are the key concepts you need to understand to accurately answer the question.
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Chapter 21: Problem 3
What two key factors cause labor productivity to increase over time?
These are the key concepts you need to understand to accurately answer the question.
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What are the names of the following events that occur during a business cycle? a. The high point of economic activity b. The low point of economic activity c. The period between the high point of economic activity and the following low point d. The period between the low point of economic activity and the following high point
The federal government in the United States has been running large budget deficits. Suppose that Congress and the president take actions that turn the budget deficits into budget surpluses. a. Use a market for loanable funds graph to illustrate the effect of the federal budget surpluses. What happens to the equilibrium real interest rate and the quantity of loanable funds? What happens to the level of saving and investment? b. Now suppose that households believe that surpluses will result in Congress and the president cutting taxes in the near future in order to move from budget surpluses to balanced budgets. As a result, households increase their consumption spending in anticipation of paying lower taxes. Briefly explain how your analysis in part (a) will be affected.
Suppose you can receive an interest rate of 2 percent on a certificate of deposit at a bank that is charging borrowers 6 percent on new car loans. Why might you be unwilling to loan money directly to someone who wants to borrow from you to buy a new car, even if that person offers to pay you an interest rate higher than 2 percent?
Briefly explain why the total value of saving in the economy must equal the total value of investment.
Why is a country's financial system important for longrun economic growth?
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