ECON 2010 Chapter Notes - Chapter 5: Annual Percentage Rate, Core Inflation, Macroeconomics
Document Summary
In 1930, babe ruth earned a salary of ,000; in 2001 barry bonds earned . 3 million. The answer to this questions isn"t obvious b/c the price of just about everything increased dramatically b/w 1930 and 2001, reflecting the inflation that occurred in the u. s over that time period. Inflation can make a comparison of economic conditions at diff points in time quite difficult. Quantities that are measured in dollars (currency units) and then adjusted for inflation are called. Working w/ real quantities, economists can compare the real incomes of babe ruth and real quantities (real gdp is gdp adjusted for inflation) Barry bonds, as well as any economic measurement that is expressed in dollars. Inflation also makes it difficult to compare rates across time. Important benefit of studying macroeconomics is learning how to avoid the confusion inflation creates, when we compare economic conditions over time.
