UGA ECON 2105 - Exam 2 Study Guide (8 pages)

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Exam 2 Study Guide



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Exam 2 Study Guide

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Module 14, 15, 16, 17, 18


Pages:
8
Type:
Study Guide
School:
University of Georgia
Course:
Econ 2105 - Prin of Macroecon
Edition:
1

Unformatted text preview:

ECON 2105 1st Edition Exam 2 Study Guide Lecture 8 module 14 How do we protect ourselves from inflation Landlord rent prices you would have to raise the price of rent according to inflation rate adjust for inflation rate Lenders interest rate charge higher interest rate Workers wages as boss to be paid more to adjust for cost of living Tuition according to college they have to raise tuition rates because the cost of running the school has risen Shoe leather cost the increased cost of transactions cause by inflation o In Israel inflation rate hit 500 in 1985 people spent a lot of time in line at banks Menu Cost the real cost of changing a listed price Unit of accounts cost cost arising from the way inflation makes money a less reliable unit of measurement calculations are hard when inflation is high Nominal interest rate adjusted for inflation is called real interest rate Real interest rate Nominal interest rate inflation rate Lecture 9 module 15 Chained CPI use the same prices but different formula and weights it accounts for consumers ability to achieve the same standard of living from alternative sets of consumer goods and services Core CPI all items in CPI less food and energy a reliable measure of inflationary and deflationary periods Price index in a given year cost of market basket in a given year cost of market basket in a base year X 100 Producer price index PPI similar to the CPI but measures changes in the prices of goods purchased by producers Economists also use the GDP deflator which measures the price level by calculating the ratio of nominal to real GDP The GDP deflator for a given year is 100 times the ratio of nominal GDP to real GDP in that year Lecture 10 and 11 module 16 How much consumers spend when they receive more income Marginal propensity to consume or MPC MPC consumer spending disposable income Where change Disposable income current income transfer payments tax payment In this Module we are assuming that the output production is determined



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