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Macro 5
The document summarizes key concepts in macroeconomics including: - Equilibrium models of supply, demand, and minimum wage rates and their impact on employment levels. - The rule of 70s for calculating doubling time of values growing at a compound rate. - Factors that influence innovation including incentives, creativity, and intellectual/physical/financial capital. - Definitions and calculations for GDP, GDP per capita, nominal vs real GDP, GDP deflator, inflation rates, and using base years to adjust for inflation.
Macro 5
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- 3. $0 $5 $10 $15 $20 0 10 2030 40 50 60 Supply Demand Wage Workers 1. What is the equilibrium wage rate and number of workers? 2. If you raise the Minimum Wage to $15, what will be the number of workers employed and unemployed?
- 4. $0 $5 $10 $15 $20 0 10 2030 40 50 60 Supply Demand Wage Workers Equilibrium Wage 30 workers 30 jobs no unemployment Minimum Wage 40 workers 20 jobs 20 unemployed workers Minimum Wage 20 workers get a raise 10 workers lose job 10 new unemployed workers Minimum Wage
- 5. Rule of 70s Doublingtime = 70 r
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- 7. Flying Shuttle Single mostimportant invention launching the Industrial Revolution
- 8. John Kay SteveJobs
- 9. Economics of Ideas Imitatorsdrive innovators out of the market Patents 20 year monopoly
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- 11. Incentives dignity property rights honest government politicalstability rule of law
- 12. Increase the number ofideas per hour? ideas for making it easier to create more ideas
- 13. A candle loses nothingby lighting another candle - John Heller
- 19. Ideas IntellectualHumanPhysical Financial Inventions Culture Entrepreneurs The EightCapitals of Innovation Stuff unorganized How we use our stuff The earth is full.. Organizing Intelligence Agency Creativity Likeness Bring Order to Chaos Making things smart to be agents D&C 104:17 intelligizing capitals The glory of God is intelligence… D&C 93:36
- 20. What is GDP Themarket value of all final goods and services produced in a country in a given time.
- 21. Two Ways Spending =C + I + G + (M-X) Income = Wages + Rent + Interest + Profit
- 22. What is GDPper Capita? GDP ÷ Population
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- 24. Measuring the Cost ofLiving
- 25. Measuring the Costof Living GDP Deflator Consumer Price Index Interest Rates
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- 27. GDP increases Are wemaking more stuff, or are prices going up?
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- 30. When you havelines waiting to buy your product, you can do two things: make more, or raise prices
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- 34. Inflation Cause: Printing money fasterthan making goods Effect: Rising prices
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- 36. Real will always have abase year
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- 38. Pizza Soda Year PriceQty 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
- 39. GDP Deflator Nominal GDP RealGDP= x 100
- 40. GDP Deflator $1,560 $780= x100 = 200 Prices have doubled
- 41. If the theGDP Deflator is 178 and a Pizza cost $15, what was the price in the base year? $15 ÷ 1.78 = $8.43
- 42. GDP Inflation Rate GDPDeflatorYear 2 - GDP DeflatorYear 1 GDP DeflatorYear 1= x 100
- 43. If the theGDP Deflator is 178 in 2010 and 192 in 2011, what was the rate of inflation? 192-178 178 x 100 =7.86%