Shifts in the Long Run AS
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1. Changes in resources= new natural gas deposits found
2. changes in technology= the internet
3. changes in institutions= decrease in income taxes
turn commonly owned forests and fisheries into privately owned property
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increase GDP, private property rights
,Budget surplus
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occurs when revenues exceed outlays
measuring economic freedom
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1. size of government
2. legal structure and security of property rights
3. access to sound money
4. freedom to exchange with foreigners
5. regulation of credit, labor, and business
0-100
nominal gdp grows by 7%, inflation is 2%, population growth 2%, what is real per
capita gdp growth
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3%
Average income tax rate
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, total tax paid divided by taxable income
Suppose that you have the following information about the economy, where all
figures are in millions of dollars:
Full employment output = $2,000
Consumption = $1,200
Investment = $400
Government spending = $500
Net exports = $200
Because short-run output is __________ full employment output, in the long run we would
expect the price level to __________.
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less than; fall
TFP growth
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measures growth caused by technological progress
Social Security
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, requires workers to pay a Social Security payroll tax into the social security
trust fund used to support the elderly
Total Factor Productivity (TFP)
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amount of output produced per unit of input
worker productivity = ???
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Y/L
Y is Output= real GDP
L Labor= Hours worked by labor force
Progressive tax
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takes larger percentage from high income earners.
-luxury tax
The long-run aggregate supply curve would shift right if the government were to
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1. Changes in resources= new natural gas deposits found
2. changes in technology= the internet
3. changes in institutions= decrease in income taxes
turn commonly owned forests and fisheries into privately owned property
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increase GDP, private property rights
,Budget surplus
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occurs when revenues exceed outlays
measuring economic freedom
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1. size of government
2. legal structure and security of property rights
3. access to sound money
4. freedom to exchange with foreigners
5. regulation of credit, labor, and business
0-100
nominal gdp grows by 7%, inflation is 2%, population growth 2%, what is real per
capita gdp growth
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3%
Average income tax rate
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, total tax paid divided by taxable income
Suppose that you have the following information about the economy, where all
figures are in millions of dollars:
Full employment output = $2,000
Consumption = $1,200
Investment = $400
Government spending = $500
Net exports = $200
Because short-run output is __________ full employment output, in the long run we would
expect the price level to __________.
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less than; fall
TFP growth
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measures growth caused by technological progress
Social Security
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, requires workers to pay a Social Security payroll tax into the social security
trust fund used to support the elderly
Total Factor Productivity (TFP)
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amount of output produced per unit of input
worker productivity = ???
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Y/L
Y is Output= real GDP
L Labor= Hours worked by labor force
Progressive tax
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takes larger percentage from high income earners.
-luxury tax
The long-run aggregate supply curve would shift right if the government were to
