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Economics McCollough
Exam 3 Flash Cards McCollough Economics Lamar University
| Question | Answer |
|---|---|
| According to classical theory, we move to point f because of... | Labor supply increases so people feel walthier causing k/l to decrease. |
| Is the classical growth theory still relevant? Give 2 examples | 1) The Great Depression 2) 9/11 and the Housing Market Crash |
| Your answer in part iii can be attributed to three reasons. (As people were getting richer they were having less kids) | - As people moved to urban living the did not need kids to work on farms. - As countries developed they socialized pension, so kids were no longer needed. - As people got richer, the oppurtunity cost to have kids increased as well. |
| Target Rate of Interest is...(The interest rate associated with point A) | The interest rate that keeps a steady K/L ratio |
| According to NEOclassical growth theory, we then move to point G b/c... | K/L increases because of population and production increases. |
| The New Growth Theory states that technology is always advancing but the pace of technological advancement really depends on 3 factors and they are | 1- Will of people wanting to make discoveries 2- Competitiveness of countries 3- Educational Backgrounds |
| Name 5 Institutional structures that are necessary to promote growth (First 3) | 1- Stable political systems- To maintain order and finances for what's best for the country. 2- Free Trade- Achieve success individually and through major corporations 3- Patents and Copyrights- To protect originality and new ideas |
| 5 institutional structures that promote growth (Last 2) | 4- Free market systems- we will be able to buy/create what is best for us and economy. 5- Leisure and widespread education- gain better understanding and create future products and service. |
| Name 5 reasons why the U.S. supplies more labor than France. | 1- France has better unions. 2- France has a shorter work week. 3- Cultural differences between work and leisure time. 4- France has better unemployment benefits 5- France has higher taxes on labor |
| Name 3 ways to increase labor productivity | 1- Increase Wages 2- Increase Techonology 3- Competitiveness Among employees 4- Increase quality of labor 5- increase quantity of capital |
| Give 4 criticisms of economic growth | 1- Environmental problems 2- Growth hasn't solved sociological problems 3- High growth economies are stressful 4- high growth rates aren't sustainable |
| Those who criticize economic growth say it leads to resource depletion. What to we point to, to say this isn't true. | If it were, prices would increase, not decrease. |
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