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ECO 1102 Study Guide - Midterm Guide: Gdp Deflator, Physical Capital, Human Capital

Course Code
ECO 1102
Najib Khan
Study Guide

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-GNP (national) matters who produced the movie, vs GDP (domestic) where it was
-GDP: production inside the borders of a country, no matter by who. or GDI
(domestic income)
-GNP: production by the citizens of a country no matter where they are. or GNI
-Per capita/[erson calculation = Total GDP/Total Population
-->you use this as to get the "real picture" of the country's economic well-being,
not just the GDP.
Jan.27, 2016
CPI calulation (always b/w two consecutive years)
->determine the basket (goods and services) (ex. 10kg of beef per basket
-Find the prices
-Compute the basket cost
-Choose a base year and compute index
-Compute the inflation rate
ex. Price 2011 = 80 Inflation rate
Price 2012 = 90 -[(CPI year 2 - CPI year 1)/(CPI Year 1)] x
90/80 = 1.125
1.125 x 100 = 112 for year 2
GDP Deflator vs CPI
Production time and consumption
Domestic production (excludes imports) vs including imports
Interest rates
$1000(0money in bank) $1000 (price)
$1010 $1020
Debt financing
Saving ==(the three stripes)
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