9. Economic Growth the Financial System

9. Economic Growth the Financial System - which firms...

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Economic Growth the Financial System, And Business Cycle - Business Cycle – Alternating periods of economic expansion and economic recession - Rule of 72 Number of years to double = 70/ (Growth Rate) - Labor Productivity – the quantity of goods and services that can be produced by on worker or by one hour of work - Capital – manufactured goods that are used to produce other goods and services - Technological Change – Economic growth depends more on technological change than on increases in capital per hour worked. - Technological change - is an increase in the quantity of output firms can produce using a given quantity of input - Potential GDP – the level of real GDP attained when all firms are producing at capacity - Financial System – the system of financial markets and financial intermediaries through
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Unformatted text preview: which firms acquire fund-Financial Markets - market where financial securities , such as stocks and bonds, are bought and sold-Financial Intermediaries firms, such as banks, mutual funds, and insurance companies, that borrow funds from savers and lend them to borrowers-The Macroeconomic of Saving and Investment Y = C + I + G + NX Y= C + I + G I = Y C G S Private = Y + TR C T S Public = T G TR S = S Private + S Public S = (= Y + TR C T) + (T G TR) S = Y - C G S= I-Market for Loanable Funds the interaction of borrowers and lenders that determines the market of interest rate and the quantity of loanable funds exchange-Crowding Out A decline in private expenditure as a result of an increase in government purchases-...
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