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Key concepts (12) - Coggle Diagram
Key concepts (12)
Chapter 16
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Flow
A quantity measured per unit of time, such as annual income or hourly wage.
Taylorism
Innovation in management that seeks to reduce labour costs, for example by dividing skilled jobs into separate less-skilled tasks so as to lower wages.
Bargaining power
The extent of a person’s advantage in securing a larger share of the economic rents made possible by an interaction.
Concave function
A function of two variables for which the line segment between any two points on the function lies entirely below the curve representing the function (the function is convex when the line segment lies above the function).
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Countercyclical
Tending to move in the opposite direction to aggregate output and employment over the business cycle.
Capital intensive
Making greater use of capital goods (for example machinery and equipment) as compared with labour and other inputs.
Acyclical
No tendency to move either in the same or opposite direction to aggregate output and employment over the business cycle.
Capital goods
The equipment, buildings, and other durable inputs used in producing goods and services, including where applicable any patents or other intellectual property that is used. Raw materials used in production are referred to as intermediate inputs.
Co-insurance
A means of pooling savings across households in order for a household to be able to maintain consumption when it experiences a temporary fall in income or the need for greater expenditure.
Creative destruction
Joseph Schumpeter’s name for the process by which old technologies and the firms that do not adapt are swept away by the new, because they cannot compete in the market. In his view, the failure of unprofitable firms is creative because it releases labour and capital goods for use in new combinations.
Beveridge curve
The inverse relationship between the unemployment rate and the job vacancy rate (each expressed as a fraction of the labour force). Named after the British economist of the same name.
Innovation rents
Profits in excess of the opportunity cost of capital that an innovator gets by introducing a new technology, organizational form, or marketing strategy. Also known as: Schumpeterian rents.
Chapter 16
Adjustment gap
The lag between some outside change in labour market conditions and the movement of the economy to the neighbourhood of the new equilibrium.
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Short run (model)
The term does not refer to a period of time, but instead to what is exogenous: prices, wages, the capital stock, technology, institutions.
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Long run (model)
The term does not refer to a period of time, but instead to what is exogenous. A long-run cost curve, for example, refers to costs when the firm can fully adjust all of the inputs including its capital goods; but technology and the economy’s institutions are exogenous.
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Medium run (model)
The term does not refer to a period of time, but instead to what is exogenous. In this case capital stock, technology, and institutions are exogenous. Output, employment, prices, and wages are endogenous.
Wage-setting curve
The curve that gives the real wage necessary at each level of economy-wide employment to provide workers with incentives to work hard and well.
Inclusive trade union
A union, representing many firms and sectors, which takes into account the consequences of wage increases for job creation in the entire economy in the long run.
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Labour market matching
The way in which employers looking for additional employees (that is, with vacancies) meet people seeking a new job.
Industry
Goods-producing business activity: agriculture, mining, manufacturing, and construction. Manufacturing is the most important component.