ECON 20 Lecture Notes - Lecture 8: Business Cycle, Nominal Rigidity
Document Summary
Corrects for price changes (measures the value of final goods and services produced within the boarders of a country during a specific period of time, usually a year) Uses current prices (tells us if we are growing or not growing) Increase in overall level of prices (prices go up but output does not change) Price index (pi) = (mkt basket of g&s produced within a given year) / (mkt basket of g&s produced in a base year) Monetary is instantaneous, but can take up to 6 months in some cases. Fiscal is much slower in making changes to stimulate the economy because of the different levels of administration it has to go through. 17. 9% in greece, 3. 5% in s. korea, 9. 3% in france, etc. 1. 3% in norway, 14% in kenya, 21% in argentina, etc. Standard of living measured by output per person. No growth in living standards prior to industrial revolution.
