Recitation_1_F09

Recitation_1_F09 - 1 1.1 14.02. Recitation 1. Macro Data...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1 14.02. Recitation 1. Macro Data 1.1 Review of Macro Data Want a measure of aggregate economic activity. Question: how do we aggregate the di/erent types of goods and services into a single measure? One way to go: use the current price of each good and service as a weight to build an aggregate measure (or average). This is nominal GDP . Y t ± N X i =1 p it q it Problem: prices a/ect GDP, even if quantities do not move. Y t may real GDP , which consists of summing the quantities of ±nal goods and services using constant prices (that is, the prices of some arbitrarily chosen base year): y b t ± N X i =1 p ib q it where b denotes the base year. Note that Y t = y t t (real and nominal GDP coincide at the base year) We also want a measure of prices in the economy. Question: how do we average all the di/erent prices? Two ways to go: 1. CPI (consumer price index), which is just the price in dollars of a representative consumption basket. 2.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Recitation_1_F09 - 1 1.1 14.02. Recitation 1. Macro Data...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online