19-24 econ SG - Chapter 20 Coupon Payment: An interest...

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Chapter 20 Coupon Payment: An interest payment on a bond express the coupon as a percentage of the face value of the bond, we find the interest rate on the bond called the coupon rate. Real GDP for 2009 = quantity 2009 X price in base year National Income < GDP (always) Labor Force = Unemployed = Employed NOT in the labor force: retirees, housemakers, full time students, people on active military duty, prison, and those in mental hospitals. Reasons why high percentage of women in work force - Changing social attitudes - Federal legislation outlawing discrimination - Higher wages - Fewer children Reason for creation and destruction of jobs (why unemployed for only a few months) - Change in consumer tastes - Technological progress - Success and failure of entrepreneurs in responding to opportunities and challenge shifting consumer tastes and technological change - # of people employed = # of jobs created + # jobs destroyed Full employment = No cyclical unemployment Normal level of unemployment = frictional + structural unemployment (Natural rate of unemployment) Minimum wage > Market wage quantity of labor supplied > quantity of labor demanded Efficiency wage > market wage quantity of labor supplied > quantity of labor demanded same with minimum wage laws and labor unions The higher the inflation rate, the lower the real interest rate (real interest rate = ______________________________________________ ) __ Nominal income generally increases with inflation Income rising(falling) faster than the rate of inflation
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purchasing power will rise(fall) Especially hurt by inflation: people on fixed income salaries Anticipated/Unanticipated Inflation Government taxes the nominal payment on bonds, with no adjustments for inflation Chapter 21 Long-Run economic growth – the process by which rising productivity increases the average standard of living Measure long-run economic growth by increased in real GDP per capita over long periods of time (pg. 700) Increases in real GDP per capita depend on increases in labor productivity. If Capital Stock per hour rises, then worker productivity rises Human Capital – Knowledge or education that one aquires through schooling or training in a particular skill Technological Change is more important than increases in capital per hour worked (pg. 706) The total value of saving in the economy must equal the total value of investment Total savings = total investment (must) Chapter 22 Economic growth model explains growth rates in real GDP per capita over the long run focuses on the long-run increases in labor productivity Labor productivity - quantity of capital per hour worked - level of technology Sources of technological change - better machinery and equipment - increases in human capital - better means of organizing and managing production Economic growth increase in real GDP per capital - increase in quantity of physical capital available to workers and technological change - GDP per hour worked/capital per hour worked = Economic Growth
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This note was uploaded on 02/15/2010 for the course ECO 001 taught by Professor Gunter during the Fall '06 term at Lehigh University .

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19-24 econ SG - Chapter 20 Coupon Payment: An interest...

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