The document discusses the difference between real and nominal economic values and how inflation affects them. It provides examples of calculating real GDP growth based on nominal GDP growth and inflation rates. It also gives examples of calculating real interest rates and income changes based on nominal values and inflation. Finally, it discusses using the GDP deflator to calculate inflation rates from nominal and real GDP values.

2. Secret auction

3. Let’s double the money supply

5. Candy auction

6. Grading schemes you have seen here
at Pueblo?
Klein – base 10, X/10, exams: X/42
 Crane ?
NOMINAL
 Santa Cruz?
 Ayala?
DIFFERENCE?
 Wallace?
 Science?


7. REAL VS. NOMINAL
CHANGE

Nominal GDP : change in numbers
usually a %
 “Raw data”
Real GDP : Change after inflation
 Real = Nominal – Inflation rate

Real interest change
 Real income changes


9. Lets practice
Nominal GDP grew by 10%, WOW!
 CPI: 7.9% Real GDP = ???

Nominal Raise: 3%, YEAH!!!!!
 CPI: 3.2%

Interest Rate on fixed rate mortgage: 4 %
 CPI: 2.3 %


11. GDP Deflator
Nominal GDP
Real GDP
X 100 = ___________ %

13. Mankiw Review OR
WORKSHEET

Page 510 #1, 2, 4, your choice: 5 or 6