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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”...
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- Spring '07
- Inflation, Inflation rates