ECON 162: Midterm 2

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16 Cards in this Set

Front	Back
international arbitrage	convert and talk about which currencies appreciate and depreciate.
purchasing power parity theory	currencies have the same purchasing power in their countries
GDP vs. GNP	GDP refers to goods/services produced within a country GNP refers to goods/services produced around world in factories or offices owned by the country
what happens to the price of a product as people profit from international arbitrage	They will converge until the only price differentialreflects the price of shipping costs of $x.
what happens when the value of the dollar falls	imports become more expensive to US consumers, soimports will decline. foreigner's export spending will increase, leading to a surplus in the capital/financial account (and a deficit in the current account).
calculate GDP	C + I + G + (x-m)
calculate GNP	GDP + NFIA
NI using the income approach	W + i + P + profits
calculate statistical discrepancy	SD = NNP - NI
calculate nominal GDP in year 1	Q1 x P1
calculate nominal GDP in year 2	Q2 x P2
calculate percent change in nominal GDP	nom GDP Y2 - nom GDP Y2 / nom GDP Y1
finding real GDP part 1	real GDP in year 1 = nominal GDP in year 1 real GDP in year 2 = nominal GDP in year 2
finding real GDP part 2	Real GDP in Year 2 is foundby valuing Year 2’s output at Year 1 prices. Real GDP in Year 1 is foundby valuing Year 1’s output at Year 2 prices
costs of anticipated inflation	1) menu costs 2) shoe leather costs 3) increased uncertainty about revenues and costs
calculate NNP	GNP - CCA