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Chapter 6 Starting with inflation
Learning Objectives 4, 5 and 6
LO4: Discuss how the Consumer Price Index is calculated
LO5: Explain the difference between inflation and the price level
LO6: Summarize the costs of anticipated and unanticipated
Macroeconomics Final Exam Review
LO1: Explain the circular flow.
LO2: Identify the components of GDP
LO3: Describe the steps from GDP to income
LO4: Calculate real and nominal GDP
LO5: List the phases of the business cycle
LO6: Discuss the rela
Notes: Chapter 8 Why do Economies Grow?
8.1 Economic Growth Rates
Capital deepening: Increases in the stock of capital per worker.
Think: Bathtub Model
Technological progress: More efficient ways of organizing
economic affairs that allow
There is much to be said about education in the United States. Due to the strength in our nations higher
education, the efficiency and productivity of industries in America are far better than any other nation in
the world. Education gr
Chapter 11 Notes: Poverty and Inequality
Chronic Poverty: - Hunger, undernourished, no drinking water,
Most poverty in Latin America is in reference to the lack of
education in the communities of rural areas and urban areas
Exam# 2 Study List what you have or must to know?
Keynesian economics page 240 The general theory of employment, interest and
money. The main cause of the great depression of the 1920s was insufficient aggregate
demand for goods and services. A typical ca
Technique and ability alone do not get you to the top it is the willpower that is the most
important. This willpower you cannot buy with money or be given by others it rises from your
heart." Junko Tabei after becoming the first woman to climb Everest in
What is Economics?
What products a firm should produce?
What resources are available to manufacture?
What consumers should buy and how many should they buy?
Generally, economics are business decisions based on the scarcity of resourc
Labor force is the total amount of people that are employed
Unemployment rate=(ppl looking for work/labor force)x100
CPI: Consumer price index-> Consumers produce
PPI-Producer price index -> Firms intermediate goods
What generates economic growth?
Capital deepening-employing more capital per worker
Each workers shoud generate more output so that GDP increases
Technology that the firms have to spend on resarouch and development
Resources an economy needs
Natural-coal, wood, water
Will the business succeed?
The technology that is used
Will the business earn income?
Macroeconomics analyzes a nations economy, unemployment, inflation, and economic growth
GDP-Gross Domestic Product
Its product and output
ITs the total market value of all goods and services produced domestically in a given year
*When measuring GD
Pf=f(k,L) factors of production
K=level of capital
Marginal product of labor-additional output generated from each new hire
On the short run:
Hire more labors-firm will experience law of diminishing return cause k
The Foreign Exchange Market
The Foreign Exchange Rate and the Market for Foreign Exchange
Foreign exchange rate: the price of one currency in terms of another.
e.g., US$/ or /US$
The foreign exchange rate is determined by the interaction of demand for and
The Monetary and Portfolio Balance Approaches to External Balance
The Monetary Approach to the Balance of Payments
The monetary approach to the balance of payments argues that the BOP is
mainly a monetary phenomenon.
This approach requires us to consider
Price Adjustments and Balance-of-Payments Disequilibrium
The Price Adjustment Process and the Current Account Under A Flexible Rate System
A depreciation of the home currency causes foreign goods to become more
expensive, reducing consumption of imports r
International Financial Markets and Instruments: An Introduction
International Bank Lending
Banks balance sheets commonly have loans and deposits that are international in
As of 2011, gross international bank lending was $35.9 trillion!