Macro 5

2. Lecture 5
Macroeconomics

8. Pizza Soda
Year Price Qty Total Price Qty Total
Total
Total
%
Change
2010 $5 100 $500 $1.00 50 $50 $550
2011 $6 134 $804 $1.50 40 $60 $864 57.1%
2011* $5 134 $670 $1.00 40 $40 $710 29.1%
2012 $10 150 $1500 $2.00 30 $60 $1,560 80.6%
2012* $5 150 $750 $1.00 30 $30 $780 9.9%
* Prices adjusted to 2010 Rates
Real versus Nominal GDP

9. Quiz Name______
1. If the GDP Deflator is 207, how much has
inflation increased since the base year?
2. If the GDP deflator is 178 on January 1,
2019 and 165 on January 1, 2018, what was
inflation during 2018?
3.

10. GDP Deflator
Nominal GDP
Real GDP= x 100

11. GDP Deflator
$1,560
$780= x 100
= 200 Prices have
doubled

12. If the the GDP Deflator is
178 and a Pizza cost $15,
what was the price in the
base year?
$15 ÷ 1.78 = $8.43

13. GDP Inflation Rate
GDP DeflatorYear 2 - GDP DeflatorYear 1
GDP DeflatorYear 1= x 100

14. If the the GDP Deflator is
178 in 2010 and 192 in 2011,
what was the rate of
inflation?
192-178
178
x 100 =7.86%

15. Year Nominal Real
GDP
Deflator
2010 550 550
2011 864 710
2012 1560 780
GDP Deflator = (Nominal ÷ Real ) x 100

16. Problems with GDP
Inequality
Types of Goods and Services
Happiness
Others?

17. Chapter 7
Wealth of
Nations

18. Ideas
IntellectualHumanPhysical Financial
Inventions
Culture
Entrepreneurs
The Capitals of Innovation
Innovation
Human Beings
Markets

19. Trust

20. Rule of 70s
Doubling time
=
70
r

21. 10%?
7%
3.5%
1%

22. What happened to those 88 people?

25. Culture
Institutions
Property Rights
Honest government
Political stability
A dependable legal system
Competitive and open markets

26. The Market for Money
Interest is the rent we pay
when we borrow money.
Earn money
Rent money

27. The Market for Money
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
$0 $100 $200 $300 $400 $500 $600 $700 $800
Savings/Borrowings
Interest
Rate
Demand
Supply

28. 1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0 100 200 300 400 500 600 700 800
The Market for Money
Savings/Borrowings
Interest
Rate
Demand
Supply

29. The Market for Money
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
$0 $100 $200 $300 $400 $500 $600 $700 $800
Savings/Borrowings
Interest
Rate
Demand
Supply

30. The Market for Money
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0 100 200 300 400 500 600 700 800
Savings/Borrowings
Interest
Rate
Demand
Supply
Demand
w/ Govt

31. The Market for Money
Savings/Borrowings
Interest
Rate
Demand
Supply
5%
$400