EC202 1nd Edition Lecture 15 Outline of Last Lecture I. IndexingII. Real GDPIII. Nominal GDPOutline of Current Lecture II. Allocation of savingsCurrent Lecture-allocation of savings to productive uses-economic Growth is enhanced by1. high rates of saving and investment2. the use of scarce saving to fund the most productive projects-allocation of saving-in free markets by a decentralized financial system-in command systems by a centralized bureaucracy-free market-oriented financial systems-both institutions and markets-banks, and bond and stock markets, for example-provide information to savers-ways to use the funds that are most productive-help savers share the risks-improves allocation to risky but productive projects-can misallocate resources if a “bubble” occursThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.-command economy:-misallocates resources -uses non-economic reasons to make allocation decisions-political favoritism often influences allocation decisions-difficult or impossible to obtain the needed information and expertise is lacking to be able to allocate
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