Menu_27_Oct_10

Menu_27_Oct_10 - NOT loss of purchasing power, rather. .....

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

View Full Document Right Arrow Icon
TODAY’S MENU: Wednesday 27 October 2010 I. BUSINESS A. Practice Problems 1. Chapter 25: 1, 2, 3b-f, 6a, 7, 10 (GDP only), 12a, 16 II. SUBSTANCE A. Inflation and Inflation Rates 1. Measurement: Fixed basket of goods and services (the only way to calculate the rate of inflation a. Consumer Price Index (CPI) i. fixed basket of goods and services consumed by average urban consumer b. Producer Price Index (PPI) i. fixed basket of goods and services consumed by businesses c. Total and Core inflation rates B. Uses for the inflation rate 1. KEY RELATIONSHIP: Nominal and Real values a. Real = Nominal – rate of inflation 2. Deflating a. Convert nominal values into real ones b. Application: Minimum Wage—higher in 1970 or 2010? 3. Indexing a. Adjust nominal values to hold real values constant b. Application: Social Security benefits C. True Costs of Inflation:
Background image of page 1

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

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

Unformatted text preview: NOT loss of purchasing power, rather. .. 1. Interference with long-run planning a. Increased fluctuation in inflation rates = increased risk in borrowing and lending b. Fisher Effect: nominal interest rates and inflation rates D. Gross Domestic Product (GDP) 1. Definition (important) a. What counts and what does not b. Stock and flow variables 2. Two methods of measuring: A dollar spent is a dollar earned. a. Income Approach (who is earning) b. Expenditure Approach (who is spending): y = C + I + G + X IM i. Consumption (C) plus ii. Investment (I) plus iii. Government spending (G) plus iv. Exports (X) minus v. Imports (IM) III. NEXT TIME A. Finish Chapter 25: Measuring the Aggregate Economy B. Begin Chapter 30: The Financial Sector and the Economy...
View Full Document

This note was uploaded on 10/19/2011 for the course ECON 2030 taught by Professor Bong during the Spring '07 term at LSU.

Page1 / 2

Menu_27_Oct_10 - NOT loss of purchasing power, rather. .....

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