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11 Cost mkt bskt for yr X 100 = CPI Overstates infl- substitution bias, intro of new goods, unmeasured Cost mkt bskt base yr quality changes (CPI yr1)-(CPI yr2) X 100 = Inflation CPI-includes exports, GDP defl doesn’t/CPI uses fixed bskt GDP CPI yr 1 uses bskt that changes yearly Amount in today’s dollars = Amount in year T’s dollars Price level today Price level in year T Nominal interest rate not corrected for inflation rate paid by bank quoted in printed matter Real interest rate Is corrected for inflation Real interest rate = (Nom. i rate – Inflation rate) 12some variable grows at a rate of x percent per year, the variable doubles in approximately 70/x years
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Unformatted text preview: StandardofLiving=Productivity=Output/LaborInput-(RGDP/LaborHours) GovtPolicies-domestic saving/investment from abroad/education&training/new tech/free trade Investment direct connect to growth/easier to start poor/catchup affect (diminishing return) 13Financial institutions coordinating savers and borrowers- bonds/stocks/banks/insurance/pension/mutual (Matching borrowers and savers)/saving=investment/market for loanable funds/tax reduction ^/government deficit v/budget surplus ^/ section on borrowing and lending and etc etc…...
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This note was uploaded on 04/17/2008 for the course ACG 2021 taught by Professor Hornik during the Spring '08 term at University of Central Florida.

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