MGEA06H3 Lecture Notes - Employment-To-Population Ratio, Underemployment, Gdp Deflator

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olivebeaver965

14 Dec 2012

School

UTSC

Department

Economics for Management Studies

Course

MGEA06H3

Professor

Ata Mazaheri

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MGEA06H3 Full Course Notes

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Inflation refers to the percentage change in (general) price level (% in price) each year. To get the % in price level, we: Collect information on the prices and quantities of goods and services bought. Compute the cost of bundle: p q. Calculate the % in the cost of bundle (i. e. , the % in price) Suppose an average household consumes two goods only. Using the period-1 bundle to calculate the % in price. Cost of period-1 bundle in period 1 (p1 q1): Cost of period-1 bundle in period 2 (p2 q1): Using the period-2 bundle to calculate the % in price. Cost of period-2 bundle in period 1 (p1 q2): Cost of period-2 bundle in period 2 (p2 q2): You probably notice that using period-1 bundle gives a bigger increase in prices. It is because consumers respond to price changes (the substitution effect!)

Related Questions

Measures of Inflation The GDP deflator is the broadest, most inclusive measure of change in the country's price level since it includes all final goods and services produced and sold. But the GDP deflator is not used by the government or economists as the benchmark measure of inflation; instead, the consumer price index (CPI) is used to determine changes in the cost of living. What is the shortcoming of the GDP deflator as a measure of inflation for households, and why is the CPI considered to be a more useful measure?

greycoyote29

1. What are the three key macroeconomic variables?

2. What are the three macroeconomic objectives?

3. Define GDP? What it omits to avoid multiple counting? What does it fail to capture?

4. What are the three approaches to the measurement of GDP?

5. Differentiate between Real and nominal GDP.

6. What are CPI, PPI, GDP deflator?

7. What are the methods to measure the rate of inflation?

8. What is the application of the rate of inflation?

9. What are the weaknesses of CPI as a measure of the change in the cost of living over time?

10. Explain Purchasing power parity adjustment.

11. What is economic growth?

12. Define Rule of 70.

13. Labor Force: Define it. Who is included and who is excluded from the labor force?

14. What is the difference between the unemployment rate and labor force participation rate?

15. What are the different types of unemployment?

16. What is a natural unemployment rate?

17. What are the factors that cause natural unemployment?

cyanworm673

Table 24-7. The table below applies to an economy with only two goods â hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.