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Intermediate Goods, As The Name Term Paper

As such, the amount repaid to the lender does not accurately reflect adjustments in its purchasing power. To compensate, nominal interest rates float; they change with inflation rates. Real interest rates, on the other hand, do factor in inflation rates. With this type of return rate, the borrower experiences an increase in purchasing power. 9. Cyclical unemployment arises out of a nation's reduction in productivity; it occurs when an economy produces less. Logically, this type of unemployment explodes during recessions and falls during times of recovery and/or prosperity; it follows the business cycle. Structural unemployment refers to a decreased demand of workers; it may be due to increased automation, outdated skills, or geographical incongruencies. Frictional unemployment occurs when workers are in between jobs; it is by nature temporary unemployment and reflects ordinary transitions in the labor market.

11. There exists a close relationship between technological change and the growth rate of productivity. It has been consistently demonstrated that as technology improves, labor productivity concurrently increases. In fact, growth in productivity is intimately tied to technological progress. In other words, superior...

While an economy may easily maintain its level of productivity without technological progress, this cannot be said for productivity growth.
15. Businesses often advocate the reduction of personal income taxes to combat economic slowdowns. The reasoning is that with extra disposable income, citizens are more likely to consume. With this phase of increased consumption, revenues simultaneously increase and businesses are at liberty to employ more labor. In addition, with increased income, businesses are better able to engage in research and development. This typically leads to more efficient production and an analogous reduction in consumer cost.

16. Research and development is a high priority for both businesses and governments as it increases productivity; generates additional profits; and yields high returns to society. Investment in human and physical capital is also important to businesses and governments. As with research and development, improvements in human and physical capital (i.e., well-educated workers and excellent infrastructures) translate into productivity growth. As mentioned, increases in an economy's productivity signal a nation's health.

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