FISCAL-POLICY MULTIPLIERS

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FISCAL-POLICY MULTIPLIERS The multiplier analysis shows that government fiscal policy is high-powered spending much like enlistment The parallel suggests that fiscal policy should also have multiplier effects upon output, And this is exactly right. The spell Surreptitiousness multiplier is the increase in GDP resulting from an increase of $1 in government purchases of goods and services. An initial government purchase of […]

PRICE INDEXES AND INFLATION

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PRICE INDEXES AND INFLATION We have concentrated in ‘this chapter on the measurement of output. But people are also concerned with price trends, with movements in the overall price level, with inflation. What do these mean? As an example, take the year 1999. In that year, the prices of most major categories rose modesty food prices rose 2 percent and […]

Roundaboutness

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Roundaboutness In Chapter 2, we noted that investment in capital goods involves indirect or roundabout production. Instead of catching fish with tour hands, we find it ultimately more worthwhile first to build boats and make nets-and then to use the boats and nets to catch many more fish than we could by hand. Put differently, investment in capital goods involves forgoing […]

Prices and Rentals on Capital Goods

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Capital goods are bought and sold 1 capital-goods markets. For example, Dell sell to business these computers are used by firm to help improve the efficiency of their payroll systems or production management, When sales occur, we observe the of capital goods. Most capital goods are owned by firm that uses them. Some capital goods, how are rented out by their […]

Differences In People Labor Quality

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Differences In People: Labor Quality We have just seen that some wage differentials serve to compensate for the different degrees ‘of attractiveness of different jobs. But look around you. Garbage collectors make much less than lawyers, yet surely the legal life has higher prestige and much more pleasant working conditions. We see countless examples of high-paying jobs that are more pleasant rather […]

DEMAND FOR LABOR

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DEMAND FOR LABOR We begin our examination of the general level by examining the factors underlying the demand for labor. The basic tools were provided in the last chapter. where we saw that the demand for a factor of production reflects the marginal productivity of that input.· Figure 13-2 illustrates the. marginal-productivity theory. At a given time and with a given […]

THE DISTRIBUTION OF NATIONAL INCOME

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THE DISTRIBUTION OF NATIONAL INCOME The our new understanding of theory, we can now come back to the question raised at the beginning of the chapter. In a world of intense competition, how do marke~ allocate national income among’the many factors of production? A amplified theory of was first proposed around the turn of the century by John Bates ~ […]

Factor Incomes vs. Personal Incomes

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Factor Incomes vs. Personal Incomes It is important to understand the distinction between factor incomes and personal incomes. Table 12-1 reports the distribution of factor incomes-the division between labor and property incomes. But the same person may own many different factors of production. For example, someone might receive a salary, earn interest on money in a savings account, get dividends from […]

A. ECONOMICS OF RISK AND UNCERTAINTY

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A. ECONOMICS OF RISK AND UNCERTAINTY ,Our analysis of markets presumed that were known for certain and that each fin could predict how other firms would behave. In reality, business life is teeming with risk and’ uncertainty. Let’s see how risk clouds the picture if you are in the oil business and decide to drill a well. To be you […]

Intellectual Property Rights

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Intellectual Property Rights Governments have long recognized that creative activities need special support because the rewards for producing valuable information like inventions arc reduced by imitation: The u.s. Constitution therefore authorizes Congress “to promote the Progress of Science and useful Arts, by securing, for limited . Times, to Authors and Inventors. the exclusive Right to their respective Discoveries.” Thus special laws governing patents, […]