←
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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- Fall '09
- MATTIEUPROVENCHER
- Macroeconomics, Inflation, Monetary Policy, Unemployment, Keynesian economics
-
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