ECON 1000 Study Guide - Final Guide: Gdp Deflator, Foreign Exchange Market, Efficiency Wage
Document Summary
Answer: the gdp deflator and the cpi differ in two important ways. Prices of all final goods and services produced domestically. Many not bought by consumers (e. g. , plant machinery) Prices of all goods and services bought by consumers. Includes prices of imported goods (e. g. , italian shoes) The price of currently produced goods and services. Productivity is the quantity of goods and services that a worker can produce from each hour of work (output per labour hour of work). Productivity can be enhanced by increasing the level of technology available to the economy, as well as the physical capital and human capital available per worker. Hence, the more an economy saves, the more it can invest in physical capital, human capital and technology. One has to consume less now (i. e. , give up current consumption) so that one can consume more in the future.
