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The Real Economy - Coggle Diagram

- - - - Physical capital in the form of money can be subject to diminishing returns if it is artificially inflated, and will stimulate the "catch up effect", negating the temporary influx of capital because it was not a real influx.
        
        Government policy can have both positive and negative effects on capital through trade restrictions and/or allowances, R & D, and legislation that protects those who invest in capital.
        
        Population growth has positive and negative effects on GDP in both the short term and the long run.
- - - - Loanable funds are monies that savers have chosen not to consume and become available to borrowers.
        
        Saving incentives through tax code changes helps savers but may reduce available tax revenue to a government.
        
        Investment incentives raise the interest rate while raising the demand for loanable funds. Saving incentives lower the interest rate while increasing the supply of loanable funds.
      - National saving = private saving + public saving
- - - - Value of a company is determined by looking at its current assets and future prospects.
        
        Efficient markets hypothesis: asset prices reflect all available information about the value of an asset.
- - - - Unemployment can never equal zero because some frictional unemployment will always exist.
        
        Minimum wage laws contribute to structural unemployment along with unions and efficiency wages
        
        Unions have advocates and critics. Advocates say that unions benefit the economy by tempering control that firms have and controlling worker wages and conditions. Critics claim that unions have too much power to affect supply and demand of labor through manipulation of wage equilibriums.