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# Exam 1 review

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### Transcript

• 1. ECO 202 Macroeconomics Exam 1 Review
• 2. Percentage Change new - old x 100 = old (add %)
• 3. new - old = old new _– old = old old new _– 1 = old
• 4. Type of Functions Linear Cyclical Seasonal Volatile Exponential
• 5. Linear - Line
• 6. Cyclical - Cycle
• 7. Seasonal - Cycle Jan April July Oct
• 8. Volatile - Big Swings
• 9. Exponential 1,000,000 750,000 500,000 250,000 0
• 10. Log Convert Exponential to Linear 1,000,000 100,000 10,000 1,000 100 10 1 Make the scale exponential
• 11. Chapter 23 GDP GDP Per Capita GDP Deﬂator
• 12. Chapter 23 Gross Domestic Product abbreviation deﬁnition equation
• 13. GDP Gross Domestic Product The market value of all ﬁnal goods and services produced in a country in a given time
• 14. Market Value What something would sell for
• 15. All Everything except... Stuff you don’t sell
• 16. Final Intermediate Final Avoid double-counting
• 17. Intermediate Final
• 18. Goods and Services
• 19. Goods Services
• 20. Produced New Stuff Does not include the sale of used goods
• 21. Within a Country
• 22. In a given period of time Year Y/Y Quarter Q/Q Annualized: Q x 4
• 23. How do you calculate GDP? Equation
• 24. GDP = C = Consumption I = Investment G = Government X = Exports M = Imports
• 25. GDP = C + I + G + (X - M)
• 26. Consumption Spending by households on goods and services, except new housing
• 27. Investment Spending on capital equipment, inventories, and structures, including new housing
• 28. Government Spending on goods and services from local, state, and federal governments.
• 29. Net Exports Exports minus imports
• 30. GDP Per Capita = GDP Population
• 31. GDP Per Capita best measure of relative economic condition
• 32. GDP Deﬂator measure of changes in the price level ! Base Year
• 33. GDP Deﬂator deﬂates price inﬂation
• 34. GDP Deﬂator Nominal GDP X 100 Real GDP
• 35. Inﬂation Rate GDPD Year 2 - GDPD Year 1 GDPD Year 1 X 100 (add %)
• 36. GDP Inﬂation Rate GDPD Year 2 - GDPD Year 1 GDPD Year 1 Year 1 = 240 276 - 240 Year 2 = 276 240 = 15% 36 240 X 100 X 100 X 100
• 37. Recession Two consecutive quarters of negative GDP growth
• 38. Chapter 24 Consumer Price Index CPI
• 39. CPI a measure of the overall cost of goods and services bought by a typical consumer
• 40. GDP Deﬂator vs. CPI GDP is everything produced CPI is just what consumers buy
• 41. Inﬂation and GDP Deﬂator and CPI Import inﬂation will affect CPI but on GDP Deﬂator
• 42. CPI Steps 1. Fix the basket 2. Find the prices 3. Compute cost 4. Choose base year and compute index 5. Compute inﬂation rate
• 43. CPI Price this year X 100 Price in the base year
• 44. CPI Inﬂation Rate CPI Year 2 - CPI Year 1 X 100 CPI Year 1 Year 1 = 130 143 - 130 Year 2 = 143 130 = 10% 13 130 X 100 X 100
• 45. Problems with CPI substitution bias new goods quality changes
• 46. What increased more: Salary or CPI? Year 1990 CPI 130 Salary 50,000 2014 225 100,000 % Change 73% 100%
• 47. What increased more: Salary or CPI? Year 1990 CPI 130 Salary 50,000 2014 225 75,000 % Change 73% 50%
• 48. What increased more: Salary or CPI? Year 1990 CPI 130 Salary 50,000 2014 225 86,538 % Change 73% 73%
• 49. If you loan some one 100 riyals for one year and the inﬂation rate is 13 percent, how many riyals should you ask for in return?