Term
| Why do leader countries have an average growth rate smaller than follower countries? |
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Definition
Leader countries have a higher population, which causes the average growth rate to grow at a slower rate.
Real GDP growth
Average population growth |
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Term
| Institutional structures that promote economic growth: |
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Definition
- Strong Property Rights
- Patents and Copyright Protection
- Efficient Financial Institutions
- Literacy and Widespread Education
- Free Trade
- Competitive Market System
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Term
| Determinants of economic growth: |
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Definition
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Supply Factor
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Demand Factor
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Efficiency Factor
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Term
| Determinant of economic growth: Supply Factor |
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Definition
Increase in quality and quantity of Land, Labor, Capital, but decrease in price.
Also improvements in technology |
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Term
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Definition
| The faster an economy grows, the more negative externalities appear in the form of waste than an ecosystem must absorb or try to absorb. So the faster an econmoy grows, the more it hurts the environment. |
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Term
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Definition
| Supports commercial development or the exploitation of land and other resources |
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Term
| Critism of the Laffer Curve |
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Definition
| There is no real way to see where an economy is at on the curve and where they are behaving most effectively. |
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Term
| Newer economic theories on what causes economic instability |
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Definition
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Mainstream View
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Monetarism
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Real-Business Cycle Theory
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Coordination Failures
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Term
| The Newer economic theories on whether or not the economy self-corrects |
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Definition
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Mainstream View
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Rational Expectations Theory
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Efficiency Wage Theory
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Insider-Outsider Theory
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Term
Fundamental differences between Classical and Keynesian economic theory:
Keynesian Theory |
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Definition
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Focuses on short run
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Focuses on Aggregate Demand
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Sticky Prices and Wages
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A lot of Government Intervention
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Economy can self-correct but it takes too long
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Slope of Supply curve should be slanted as if direct relationship
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Term
Fundamental Differences between Classical and Keynesian Theory:
Classical Theory |
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Definition
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Focuses on Long Run
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Focuses on Supply
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Flexible Prices and Wages
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The Economy Self-Corrects
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NO Government Intervention
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Aggregate Supply curve should be a vertical line
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