ECON 1115 Lecture 9: notes for chapter 9, 10 and 12
21 Jan 2017
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Review for econ test
Chapter 9
Provisional GDP – economy being ay full employment
Unemployment rate formula – (no. of people employees / no. of in employment force) * 100
3 types of employment – frictional, structural and cyclical
CPI = (price of most recent market basket/ price of same basket at base price) * 100
Core inflations vs overall inflation:
Core: exclude price, energy
Overall: hurts – lenders, helps – borrower
Chapter 10
Consumption & income have a positive relationship
C = f(income, wealth, expectation, consumer confidence, r)
C(consumer) + S(saving) = I(investment)
MPC – fraction of any change of income that is consumed – change in C / change in Income
I(investment) = (R – BC (business competence) + RGDP + expenditure)
RGDP (total spending) = initial change in spending * multiplier [1/(1-mpc)]
Budget determines government spending
Net export is determines by RGDP (of USA)
The multiplier in the US is 2
Chapter 12
Average demand (AD)/ average supply (AS)
NO QUESTIONS ON EXCHANGE RATE
When technology advances AS shifts to the right
Showing economy in recession using AD/AS model – if interception point is to the left we say the
economy is in recession, when to the right econmy is in inflation
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Provisional gdp economy being ay full employment. Unemployment rate formula (no. of people employees / no. of in employment force) * 100. 3 types of employment frictional, structural and cyclical. Cpi = (price of most recent market basket/ price of same basket at base price) * 100. C = f(income, wealth, expectation, consumer confidence, r) Mpc fraction of any change of income that is consumed change in c / change in income. I(investment) = (r bc (business competence) + rgdp + expenditure) Rgdp (total spending) = initial change in spending * multiplier [1/(1-mpc)] Net export is determines by rgdp (of usa) When technology advances as shifts to the right.
