Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation...
-
Upload
abel-wells -
Category
Documents
-
view
219 -
download
1
Transcript of Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation...
![Page 1: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/1.jpg)
Macro Chapter 7
Presentation 1- Economic Growth
![Page 2: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/2.jpg)
Consumer Price Index (CPI)
• CPI reports inflation each month and year• Reports the price of a basket of 300 consumer
goods a typical urban consumer would buy• Includes foreign goods
CPIPrice of the Most Recent Market
Basket in the Particular Year
Price of the Same MarketBasket in 1982-1984
= x 100
![Page 3: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/3.jpg)
GDP per Capita
• Divide GDP by the size of the pop.• US GDP 2010 was 14.3 Trillion• Population of US was 310 million• Per Capita = 14.3 trillion/310 million• = $46,860• US #13 (1. Luxembourg 2. Norway 3. Qatar4. Switzerland 5. UAE)
![Page 4: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/4.jpg)
Economic Growth
1. An increase in real GDP over some time period
2. An increase in real GDP per capita occurring over some period of time
![Page 5: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/5.jpg)
Main Sources of Growth
• Society can grow through:• 1. Increasing inputs of resources• 2. Increasing the productivity of the
resources used• Productivity- real output per unit of
input
![Page 6: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/6.jpg)
Rule of 70
• Approx number of years required to double GDP
• = 70/annual percentage rate of growth• Ex- If China’s growth rate is 8%, it will
take their economy about 9 years to double GDP
• = 70/8= appx. 9
![Page 7: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/7.jpg)
The Business Cycle
•
![Page 8: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/8.jpg)
Downturn
• Recession / Contraction– 6 months or more of decline in total output, income
and unemployment– The period of time during which aggregate economic activity is
falling
• If the recession is particularly severe, it becomes a depression.
• During a recession– Many sectors of the economy experience declining sales and
production– Workers are laid off or forced to work only part-time
• Peak: the point in which output starts to decline
![Page 9: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/9.jpg)
Upturn
• After reaching the low point of the contraction (the trough), aggregate economic activity begins to increase.
• The period of time during which aggregate economic activity grows is an expansion or a boom.
• The high point of the expansion is called a peak.
![Page 10: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/10.jpg)
Demand-Pull Inflation
• When resources are fully employed, the business sector cannot respond to excess demand by increasing output
• Excess demand causes an increase in cost• “too much spending chasing too few goods”
![Page 11: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/11.jpg)
Cost-Push Inflation
• Rising per-unit costs of production lower profits and force the prices up
• Supply Shock- abrupt increases in the cost of raw materials
• Ex. Skyrocketing prices of oil in 1973-74 and 1979-80
• Per unit cost= total input cost/# of units of output
![Page 12: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/12.jpg)
Hyperinflation
• An extremely high and fast inflation rate• Ex- Germany in post-WW1• Serbia in 1994 the inflation rate went up 1.56
million %
![Page 13: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/13.jpg)
COLA
• Cost of Living Adjustment• An increase in benefits as inflation occurs• EX- Retirement of Firemen increases by 3%
each to keep up with the increased cost of living
![Page 14: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/14.jpg)
Who is Hurt by Inflation?
• 1. Fixed Income Receivers- not adjusted for cost-of-living
• 2. Savers- real purchasing power of a saved account deteriorates
• 3. Creditors- lenders are repaid with money that has less purchasing power
![Page 15: Macro Chapter 7 Presentation 1- Economic Growth. Consumer Price Index (CPI) CPI reports inflation each month and year Reports the price of a basket of.](https://reader030.fdocuments.in/reader030/viewer/2022032708/56649e865503460f94b88f19/html5/thumbnails/15.jpg)
Who is Not Hurt by Inflation?
• 1. Flexible income receivers- cost-of-living adjustments
• 2. Debtors- pay back loans with less valuable money