ECON 2010 : Test 1 Notes
Document Summary
Quartz sand makes silicon wafers, which makes processor, which is then built into laptop. I buy dinner- you have to pay them, so value is added: household production is missing from gdp, underground economy, buying marijuana from street dealer, we don"t catch it in gdp, gdp measures total production. What about the well being of the people: missing the value of leisure, ignores negative effects of production, no way to account for crime and social problems. Inflation rate = % change cpi: = cpi t - cpi t-1/ cpi t-1, ex. Car 4. 99% interest rate 3. 00% inflation = 1. 99% real interest: real interest rate = nominal rate inflation rate, is inflation bad? rate. Deflation : bad, expect cheaper future prices, hold off on current consumption, housing market in 2007. Unemployment- available for work: did not work last week and, actively looked for a job within last 4 weeks.
