Menu_04_Apr_11-1

Menu_04_Apr_11-1 - TODAYS MENU: Monday 04 April 2011 I....

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TODAY’S MENU: Monday 04 April 2011 I. BUSINESS A. Practice Problems 1. Chapter 27: 4, 5, 8-10, 12, 14, 15, 18 B. Third exam: One week from today II. SUBSTANCE A. Economic Growth, GDP, and Inflation Rates 1. Definition 2. Expansion and recession 3. Nominal growth, Real growth, and the Inflation rate a. If nominal growth > real growth, then inflation rate > 0 b. If nominal growth < real growth, then inflation rate < 0 c. Illustration—Magnitude matters B. Aggregate Demand 1. Expenditure approach, national income accounting a. Foundation i. y = C + I + G + X – IM ii. C = Consumption iii. I = Investment iv. G = Government spending v. X = Exports vi. IM = Imports b. Determinants of quantity of real GDP demanded (slope—negative) -as AGG price goes down, real GPD demanded goes up -not direct relationship -3 factors i. Real wealth effect -AGG price level goes down, everything else held constant, nominal stays the same—real value goes up ii. Interest rate effect (fisher effect) -spending more
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Menu_04_Apr_11-1 - TODAYS MENU: Monday 04 April 2011 I....

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