ECN 204 Study Guide - Midterm Guide: Autarky, Production Function, Real Interest Rate
Document Summary
These components add up to gdp (denoted y) Y = c + i + g + nx. The gdp deflator is a measure of the overall level of prices. Gdp deflator = 100 x nominal gdp / real gdp. How the cpi is calculated: determine the basket. Statistics canada surveys consumers to determine what"s in the typical consumer"s shopping basket : find the prices. Statistics canada collects data on the prices of all the goods in the basket: compute the basket"s cost. Use the data on prices to compute the total cost of the basket: choose a base year and compute the index. 100 x cost of basket in current year / cost of basket in base year: compute the inflation rate. The percentage change in the cpi from the preceding period. Inflation rate = cpi this year cpi last year / cpi last year x 100% Correcting variables for inflation: comparing dollar figures from different times.
