ECON 201 Lecture Notes - Lecture 3: Real Wages, Unemployment Benefits, Physical Capital
Document Summary
Midterm 1 next tuesday: chapters 1, 2, 3, 6, 7, 8. Market value of all sales of final goods. Or sum of value-added by all firms. Or sum of payments to all factors. Measures the market value of all economic activity. Misses activity that isn"t traded in a market. Money matters less as you grow richer. Nominal gdp is measured using today"s prices. P x q in any given year. P is the aggregate price level , macro p. We want a way to measure q only. Calculate pxq, assuming prices somehow stayed constant at a base year"s prices. The aggregate price level is a measure of the overall level of prices in the economy. To measure the aggregate price level, economists calculate the cost of purchasing a market basket. A price index is the ratio of the current cost of that market basket to the cost in a base year, multiplied by 100.
