A. Who's Hurt?
Savers, lenders, creditors, those on a fixed income.
B. Who Gains?
Debtors.
*COLA (Cost of Living Adjustment) automatically increases with inflation.
1. Unemployment- failure to use available resources particularly labor to produce goods and services
1a. Who's In the Labor Force? anyone above 16 years of age who's willing to work
1b. Who's Not In the Work Force? People in the military, homemakers, retired/ disabled people, people in mental institutions, and those not looking for work.
1c. Unemployment Rate- 4-5% = full employment of natural rate of unemployment (NRU)
2. How to Calculate Unemployment
(# of unemployed/ # of employed + # of unemployed x 100)
2a. Four Types of Unemployment
Frictional- people who are "in between jobs" they have transferable skills
Structural- changes in work force makes some skills obsolete. They don't have transferable skills
Seasonal- due to time of year, nature of season
Cyclical- unemployment that occurs because of recession
*Frictional & Structural are unavoidable types of unemployment.
Tuesday, February 9, 2016
Calculating GDP
1a. Income Approach- adding all the income that resulted from selling FINAL goods and services produced in a year.
( wages + rent + interest + profit +statistical adjustment)
1b. Expenditure Approach- adding all the spending on final goods and services produced in a given year.
(GDP = C (Personal Consumption) + Ig (Investments) + G (Government Spending) + Xn (Net Exports)
2a.
Compensation of Employees- wage + salaries or wage salary supplements such as welfare
Rent-income received by the households and businesses that supply resources
Interest- money paid to suppliers of loans
Proprietor's Income- comes from sole proprietorship and partnerships
Corporate Profits- could include dividends, corporate income taxes and undistributed corporate profits.
Statistical Adjustment- indirect business tax, consumption of fixed capital (depreciation) and net factor foreign payment.
3.Nominal v Real
Nominal GDP- quantity x current year price
Real GDP- quantity x base year price
-In the base year Nominal GDP = Real GDP, in years after the base year Nominal GDP > Real GDP. In years before base year Nominal GDP < Real GDP.
4. GDP Deflator
)Nominal GDP/Real GDP x100) - In years before the base year, deflator less than 100, in base year it equals 100 and in years after it's greater than 100.
5. Consumer Price Index
(cost of market basket of goods in a given year/ cost of market basket of goods in base year x 100)
6. Inflation
(Price Index In Current Year- Price Index In Year 1/ Price Index In Year 1 x 100)
( wages + rent + interest + profit +statistical adjustment)
1b. Expenditure Approach- adding all the spending on final goods and services produced in a given year.
(GDP = C (Personal Consumption) + Ig (Investments) + G (Government Spending) + Xn (Net Exports)
2a.
Compensation of Employees- wage + salaries or wage salary supplements such as welfare
Rent-income received by the households and businesses that supply resources
Interest- money paid to suppliers of loans
Proprietor's Income- comes from sole proprietorship and partnerships
Corporate Profits- could include dividends, corporate income taxes and undistributed corporate profits.
Statistical Adjustment- indirect business tax, consumption of fixed capital (depreciation) and net factor foreign payment.
3.Nominal v Real
Nominal GDP- quantity x current year price
Real GDP- quantity x base year price
-In the base year Nominal GDP = Real GDP, in years after the base year Nominal GDP > Real GDP. In years before base year Nominal GDP < Real GDP.
4. GDP Deflator
)Nominal GDP/Real GDP x100) - In years before the base year, deflator less than 100, in base year it equals 100 and in years after it's greater than 100.
5. Consumer Price Index
(cost of market basket of goods in a given year/ cost of market basket of goods in base year x 100)
6. Inflation
(Price Index In Current Year- Price Index In Year 1/ Price Index In Year 1 x 100)
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