Lecture 2 - ECONOMICS 100B Professor Steven Wood 01/20/11...

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ECONOMICS 100B Professor Steven Wood 01/20/11 Lecture 2 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy, or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. ANNOUNCEMENTS The publishers are only willing to give me the electronic version of the first three chapters, which they haven’t sent me yet. I will post them on bSpace as soon as I receive those. Next Tuesday I have to be in a conference until 3 o’clock so I won’t be there for the first hour of my office hours. LECTURE We talked about three main variables last time, but actually we want to know how to measure four variables. The variables that we are going to talk about today are economic activity, inflation, unemployment, and interest rates. Notice we didn’t really talk about interest rates as a variable last time, but it turns out to be a key variable in a market-based economy. We will see that more clearly next time. Question #2 Which country in the world has the largest economy? A. The United States B. China C. Japan D. India E. Germany Answer: The correct answer is the United States. We have a measure of economic activity of approximately $15 trillion. China is the world’s second largest economy. It has a GDP in measure of US dollars of about $5 trillion. Japan is third. It has an economic size of approximately $4.95 trillion. China passed Japan as the second largest economy in the world about six months ago. India is the fourth and Germany the fifth largest. Remember that these countries also have widely different populations. US has a population of about 300 million. China is 1.3 billion. Japan has about125 million people, which is, by the way, shrinking. India has a population of about a billion, and Germany 80 million. Even though Germany is only the fifth largest economy in the world, it has a much smaller population than all the rest. Also notice that China and Japan have economies that are about the same size, but Japan’s population is 1/10 of China’s population. Later we will be talking about how we measure the standards of living. Question #3 Which economy will be largest in 2020? A. The United States B. China C. Japan D. India E. Germany Over the last ten years, the United States has been growing at a rate of about 3% per year. China has been growing at a 10% percent rate, Japan at a 1% rate, India at a 7% rate and Germany at a 2% rate. The key is that China is growing at 10% and the US
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This note was uploaded on 02/06/2012 for the course ECON 100A taught by Professor Woroch during the Fall '08 term at University of California, Berkeley.

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Lecture 2 - ECONOMICS 100B Professor Steven Wood 01/20/11...

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