lectur1-page8 - Well the economy is a pretty complex...

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Above is work force productivity or economic output per hour worked with respect to human labor. The productivity gains from 1995 to 2002 was the “safety valve” that relieved inflationary pressures on prices in the economy during that time period. As I have remarked before, we do not know how long these productivity gains will remain at higher than historical levels. When will computer technologies be fully integrated into the economy? What new technologies are in the pipeline that will continue to allow us to produce more with the same amount or fewer resources? Productivity growth is an important “vital sign” that economists will resources? Productivity growth is an important vital sign that economists will have to continue to monitor. And you thought the human body was a complex, dynamic system.
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Unformatted text preview: Well the economy is a pretty complex, dynamic system as well. The general economy (macroeconomics) gets sick too. Businesses and consumers get economic disorders as well (microeconomics) And economist can prescribe medications as well For as well (microeconomics). And, economist can prescribe medications as well. For the general economy, lower or higher interest rates, lower or higher taxes, more or less government spending are medications use for when the economy is “too hot” or “too cold.” If the “economic doctors” misdiagnose the cause of an “economic illness,” a recession or a terrible bout of inflation could occurs as a result of prescribing the wrong “medicine.” 8...
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