Macro Midterm 2

Price Index Equation

(Current Market Basket Cost / Base Market Basket Cost) x100

Expansion

GDP Increases

Recession

GDP decrease

Nominal GDP

Output with current prices

Real GDP

Output with base year prices

CPI

measures price level with household g&s

Chain type GDP

uses price info from both years

base yr probs

overestimates gdp, underestimates inflation

simon kuznets

national income

mathis wackernagel

global footprint

poverty line

food budget for family of 4

gini coeff

changes in inequality over time

lorenz curve shows…

income distribution

USA Gini

.418 or .49

current account

flows of goods, services, income, and gifts

negative current account

trade deficit

positive current account

trade surplus

capital account

flow of financial assets

double entry bookkeeping

each transaction is debit and credit

euro can buy MORE usd than before

euro appreciates against usd

euro can buy LESS usd than before

euro depreciates against usd

PPP Theory

same purchasing power in diff countries

PPP Equation

P = Pf x E

foreign exchange markets

currency exchanged

global footprint

23.5 acres/person

frictional unemployment

between jobs

structural unemployment

tech changes

cyclical unemployment

business cycle

GDP Gap

potential real GDP - actual real GDP

say’s law

supply creates demand

classical dichotomy

separate real and nominal variables

shadow inflation

quaLity decreases at same price

shrinkflation

quantity decreases at same prices, less chips

causes of inflation

demand pull, cost push

gdp exclusions

intermediate goods, nonmarket transactions, secondhand goods, gifts, transfer payments

unanticipated inflation harms…

the rich