ECON 203 1nd Edition Lecture 28Outline of Last Lecture I. Review for exama. Market structureb. Price discriminationc. Public goodsd. unemploymentOutline of Current LectureI. nominal GDPII. Growth RateCurrent LectureI. nominal GDP- all the new, final, domestically produced, market transacted goods andservices purchased in year n valued at prices from year nYn= (P1n + Q1n) + (P2n + Q2n)…Qn = (real GDP) / (prices valued at base year)Price leveln = Yn / Qn Pc –current price PB –base pricePc – PB = (+) positive- implies inflation( a general overall rise in prices). Inflation means a dollar buys less than it used to, a decrease in purchasing power, and can be considered a tax on holding money (-) negative- implies deflation (a general overall decrease in prices). Deflation means a dollar buys less than it used to, an increase in purchasing power, and can be considered a reward for holding moneySociety mildly prefers inflation over deflation because deflation causes more patience in consumers.Q is the output or real GDPPer capita GDP= Y / population or Q / population These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.II. Growth rate (G)GQ is a guessGm – GQ = (+) positive implies inflation. We want either a positive or zero value. We do NOT want a negative number because that implies
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