Answer:
a. Menu cost.
b. Nominal wage of confusion.
c. Real shock.
d. Solow Growth Rate
e. Business Fluctuations.
Explanation:
a. Menu cost: Firms' costs associated with changing their prices.
b. Nominal wage of confusion: When workers respond, not to the purchasing power of their wage, but to the face value of their wage or salary.
c. Real shock: An event that changes the existing productivity and therefore changes the extent to which economic growth occurs.
d. Solow Growth Rate: Given flexible prices and the existing factors of production, a measure of how much the economy grows.
The Solow Growth Model, developed by Robert Solow, a Nobel Prize winning economist. It was the first neoclassical growth model which was was built upon the Keynesian Harrod-Domar model. The modern theory of economic growth is given by the Solow Model.
The equation below gives us the change in capital stock per worker with population growth at rate n;
Δk = sf(k) – (δ + n)k.
Where k: capital stock per worker in period t
s: savings rate
δ: rate of depreciation of capital
n: labor or number of workers
sf(k): savings per capita multiplied by a fraction of income saved.
e. Business Fluctuations: Variations in the growth rate from the long-run rate of economic growth real shock business fluctuations.
