lecture 1

lecture 1 - Productivity:ameasureofoutputperunitofinput

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Productivity: a measure of output per unit of input -often measured as (real) GDP per worker -Or (real) GDP per hour of work Why productivity matters? increases in productivity are probably the single  largest determinant of long-run increases in material living standards -improvement in skills  -new and better technology Note: A 3% increase in real GDP with a 4% increase in population would  be a reduction in the average standard of living  Inflation and Price Level: The price level : the average level of all prices in the economy Inflation     : the rate at which the price level is changing The CPI is based on the price of a typical “consumption basket” at some  specific time, relative to the price of the same basket of good in some base year CPI =                                                   100 annual % inflation rate = change    in    index       X100                                      index from 1 year ago a) The rate of CPI inflation for the current year is equal to the  percentage change in the CPI from the previous year to the current  year. The missing data are: 1992: 1993: 1996: 1997: 2000: 2001: 2002: 2004: 2005: inflation = (100.0 – 98.5)/98.5 = 0.0152 = 1.52% inflation = (101.8 –  100.0)/100.0 = 0.0180 = 1.80% inflation = (105.9 – 104.2)/104.2 = 
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This note was uploaded on 02/08/2011 for the course ECON 209 taught by Professor Mattieuprovencher during the Fall '09 term at McGill.

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lecture 1 - Productivity:ameasureofoutputperunitofinput

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