Categorieën: Alle - government - productivity - equilibrium

door Remek Debski 16 jaren geleden

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Macroeconomics 2HH3 - Chapter 5

The closed-economy one-period macroeconomic model explores various key concepts in macroeconomics. One important aspect is the provision of public goods, which are typically difficult for the private sector to supply, such as national defense.

Macroeconomics 2HH3 - Chapter 5

Macroeconomics 2HH3Chapter 5The Closed-EconomyOne-PeriodMacroeconomic Model

Key Terms

intertemporal substitution of labour
the substitution of labour over time by a worker in responseto movements in real wages
real business cycle theory
a theory postulating that the primary cause of aggregate fluctuationsis fluctions in total factor productivity
short run
typically describes macroeconomic effect that occur within a year'stime
long run
typically describes macroeconomic effects that occur beyond a years time
crowding out
the displacement of private expenditures by governmentpurchases
distortion tax
a tax, such as an income tax, that creates a difference betweenthe effective prices faced by buyers and sellers of some good
externality
the effect an action taken by an economic agent has onanother economic agent or agents, where the agent performingthe action does not take into account this effect on others
second fundamental theorem of welfare economics
result stating that, under certain conditions, a Paretooptimum is a competive equilibrium
first fundamental theorem of welfare economics
results stating that, under certain conditions, a competitive equilibriumis Pareto-Optimal
Pareto-optimality
A state of the economy that cannot be improved onby making on consumer better off without makinganother worse off
production possibilities fortier (PPF)
the boundry of a set that describes what consumptionbundles can be technologically exchanged for another
market clearing
when supplyequals demand in a particularmarket or markets
competitive equilibrium
a state of the economy in which prices and quantitiesare such that the behaviour of price-taking consumersand firms are consistent
fiscal policy
the government choices over government expenditures,taxes, tranfers, and government borrowing
government budget constraints
an equation describing the sources and uses ofgovernment revenues
endogenous variable
a variable that the model determines
exogenous variable
a variable determined outside the model
public goods
goods that are difficult or impossible for the privatesector to provide, for example, national defence
open economy
an economy that trades with the rest of the world
closed economy
an economy that does not trade withthe rest of the world

WORKING WITH THE MODEL:A CHANGE IN TOTAL FACTORPRODUCTIVITY

INTERPRETATION OF THE MODEL'SPREDICTIONS

WORKING WITH THE MODEL:THE EFFECTS OF A CHANGE INGOVERNMENT PURCHASES

OPTIMALITY

HOW TO USE THE MODEL
SOURCES OF SOCIAL INEFFICIENCIES

COMPETITIVE EQUILIBRIUM

GOVERNMENT