Econ. Test Two.

Econ. Test Two. - CPI in year 2 – CPI in year 1 o...

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Formulas: GDP: Y = C + I + G + (X – M) o C = Consumption. Spending by households on goods and services. IE: Car, education. o I = Investment. The purchase of goods that will be used in the future to produce more goods and services. IE: Capital equipment, inventories, houses, etc. o G = Government Expenditures. Spending on goods and services by state, local, and national governments. IE: Government salaries, spending on public works. Transfer payments are not included. o X = Exports. o M= Imports. Finding the Inflation Rate Change of Two Years:
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Unformatted text preview: CPI in year 2 – CPI in year 1 o Inflation rate in year 2 = ------------------------------------ x 100 CPI in year 1 • GDP Deflator: Nominal GDP GDP Deflator = ------------------- x 100 Real GDP • Savings: o Savings = (Y - C- T) + (T - G) Private saving = (Y - C - T). Public saving = (T - G) Chapter 9: World trade, tariffs, import quotas, arguments against free, world trade. Chapter 10: What GDP includes, the GDP deflator. Chapter 11: CPI Chapter 13: Financial markets vs. financial intermediaries, savings....
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