HACE 2100: Test 2
23 Cards in this Set
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Define Live Births
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Number of births to an individual or in a population
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Define Crude Birth Rate
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Number of births per 1,000 in a population
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Define General Fertility Rate
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Number of births per 1,000 women aged 15-44
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Trend in Live Birth
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Great Depression: Baby Bust
1940-60: Baby boom
1965-1970: Baby bust
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Trends in General Fertility Rate
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Baby bust/boom
1975-present: low/plateau
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Other trends
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Age specific: more women are waiting until their 30s
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Long-term trends in the US
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Decline
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Causes of Long-Term fertility Trend
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Increase in the costs of having and raising children
Decrease in the economic benefits of having children
Decrease in the costs of avoiding having childrens
Increase in the cost of having children
Decrease in the economic ben. of having child.
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Describe the cyclical fluctuations in U.S. fertility rate during the past century (Baby booms & Baby busts)
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Price effect
Income effect
Period effect
Cohort effect
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Price effect
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an increase in the price of children will decrease the number demanded
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Income effect
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A rise in one's income will increase the number or children demanded
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Period effect
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A change in fertility of all age groups in similar manner that results from something happening at that historical time
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Cohort effect
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a change in fertility of a group born at the same time that results from earlier shared experiences (Great Depression Cohort)
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England/Farkas' explanation of Baby Boom and Busts
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Relative Income Effect- Most Likely
income relative to expectations
income relative to parents cohort
expectation about future incom
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Objective Benefits of having children
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Tax exemption: reduces taxes by taxpayer's tax bracket
Tax Credit: reduces taxes dollar for dollar
Tax benefits of children
Deduction
Tax credit
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Objective Costs
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Child specific expenditures
Budget shares
Per capita
Avg. cost of additional bedroom
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Future Value Equation
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FV = PV (1+r)^n
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Lino's Estimate of Future Value
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Cf=Cp (1+i)^n
Cf= projected future annual dollar expenditure on a child of a particular age
Cp= present annual dollar expenditure on a child
i= projected annual inflation rate
n= number of years from present until child will reach a particular age
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Net Worth
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Total Assets - Total Liabilities
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Solvency Ratio
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Indicates how much a decline in the market of their assets a household can have before becoming insolvent
Net Worth/ Total Assets
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Liquidity Ratio
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indicates how much of a household's ONE-YEAR liabilities they could pay with their liquid assets
Liquid assets/ total CURRENT liabilites
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Debt Service Ratio:
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total monthly loan payments / monthly gross income
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Savings ratio
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cash surplus / annual net income
(net income= gross - amount withheld from the govt including social security taxes)
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HACE 2100: Exam # 3