Computing

Chapter 11: Interpreting Real Gross Domestic Product ? -The difference between real GDP and nominal GDP -Why real GDP is the appropriate measure of real economic activity ? GDP: a measure of the size of the economy represents increase in prizes of goods and services rather than an increase in output provides a good way to compare the size of different economies but not a good measure of the economy?s growth over time can grow to economic expansion or just inflation Real GDP: measures actual changes in aggregate output/ adjusted for price changes total value of all final goods and services produced during a given year calculated using the prices of a selected base year (assumed prices stay constant)

Chapter 14: Inflation: An Overview ? -The economic costs of inflation -How inflation creates winners and losers -Why policy makers try to maintain a stable rate of inflation -The difference between real and nominal values of income, wages, and interest rates -The problems of deflation and disinflation ? Inflation: Most common complaint: an increase in the price level makes everyone poorer- does not make everyone poorer Real Wage: the wage rate divided by the price level Real income: income divided by the price level Inflation Rate: the percent change per year in a price index?typically the consumer price index the percent increase in the overall level of prices per year ? ? The level of prices doesn?t matter Reducing prices = Reducing income

Chapter 12: The Meaning and Calculation of Unemployment ? -How unemployment is measured -How the unemployment rate is calculated -The significance of the unemployment rate for the economy -The relationship between the unemployment rate and economic growth ? Employed: people who currently hold a job in the economy, either full time or part time/ only if you have a job Unemployed: people who are actively looking for work but aren?t currently employed Limitations: Retired people Disabled Hasn?t actively searched for a Job in the last 4 weeks Discouraged workers Marginally attached workers Underemployed U.S. Census Bureau monthly survey called the Current Population Survey: interviewing a random sample of 60,000 American families

?? Chapter 8: Supply and Demand: Price Controls (Ceilings and Floors) Price controls: legal restrictions on how high or low a market price may go, government action in economy price ceiling: a maximum price sellers are allowed to charge for a good or service price floor: a minimum price buyers are required to pay for a good or service. Assumption: the markets in question are efficient before price controls are imposed price controls in inefficient markets don?t necessarily cause problems and can potentially move the market closer to efficiency Price Ceilings ? Push Prices down Price Ceiling: suppliers have less incentive to offer apartments less of a good are produced Consumer have higher demand shortage of good