Inflation- is a general rising level of prices

 Purchasing power - The amount of good and services that money buys

 Ideal inflation rate: 2-3 %

Three causes of Inflation

1.    Printing to much money
2.    Demand pull inflation-  “too many dollars chasing too few goods”/ Demand pulls up prices          Demand increases but supply stays the same.                                                                                   The results is a shortage driving prices                                                                                               
3.  Cost- Push Inflation                                                                                                                      Higher production costs increase prices

   Formula for inflation

   (Current year price index – the base year price index / price year index) * 100 

   Deflation- it is a decline in the general price level

   Disinflation- it occurs when the inflation itself declines

  The rule of  70

  It is used to calculate the number of years it will take for the price level to double at any given rate of inflation

 (70/ annual rate of inflation)

    Real interest rate

   The amount of money borrowed

   The percentage increasing purchasing power that a borrower pays to the lender. ( adjusted for inflation)

   Real= nominal interest rate – expected inflation

   Nominal Interest rate
  The percentage increase in money that the borrower pays back to the lender not adjusting for inflation

VIDEO BELOW SHOULD GIVE A REVIEW OVER THE NOTES TAKEN IN CLASS

Unemployment Rate

Unemployment Rate

February 12, 2017

The unemployment rate: the % of people who want a job but are not are working
labor force: unemployed and the employed
employed: 1 hour a month
temporarily absent from work
part time workers

Who is not in the labor force

Kids
full time students
military
discouraged
people who are incarcerated
retiree's
house wife/husband

Formula employment rate

# unemployed/ labor force x 100

4% to 5% anything higher than 5% would be bad

Four types of unemployment

1.Frictional unemployment
temporarily unemployed or being between jobs
individuals are qualified workers with transferable skills but are not working

2. Seasonal employment
This is a specific type of frictional unemployment which is due to the time of year and nature of the job
These jobs will be coming back

3. Structural unemployment
changes in the structure of the labor force make some skill absolute. Workers do not have transferable skills and these jobs will never be able to come back
Workers must learn new skills to be able to get a new job

4. Cyclical unemployment
Unemployment that results from economic downturns as demands for goods and services fall, demand for labor falls and workers are fined.

The natural rate and full employment
two of the three types of unemployment are unavoidable
frictional
structural

Together they make up the natural rate of unemployment (NRU)
We are at full employment if we have only the natural rate of employment.
full employment means no Cyclical unemployment
economist generally agree that an unemployment rate of around four to 6% full employment
4-5% unemployment=NRU

VIDEO ABOVE IS A REVIEW OVER THE NOTES TAKEN IN THIS POST NOTES

February Nominal GDP

Nominal GDP: the value of output produced in current prices

  P(TIMES)Q( output)

 Current year price

 Can increase from year to year if either output or prices increase

  Real GDP- The value of output produced in constant base year price

Price times Quantity

Can increase year to year if output increases

THINGS TO REMEMBER

In base year the current price will always be equal to the constant price

After base year Nominal GDP will exceed real GDP

In years before the base year real GDP will exceed nominal GD

Base year is always the earliest year if they don’t give it

GDP Deflator: it is a price index used to adjust from nominal to real GD

Formula:

(Nominal GDP / Real GDP) multiplied by 100

ALSO THINGS TO REMEMBER TOWARDS GDP DEFLATOR

In the base year GDP deflator will always equal 100

For years after the base year GDP deflator will be greater than 100

For years before the base year GDP deflator will be less than 100

Consumer price index (CPI)

It measure inflation by tracking changes in the price of a market basket of goods

(Price of the market basket in the current year / market basket in the base year) * 100

VIDEO ABOVE SHOULD GIVE A MORE IN DEPTH LEARNING BASED OFF THE NOTES IN THIS BLOG!!! SHOULD REALLY HELP

January 27, 2017

Gross Domestic Product

GDP: It is the total value of all final goods and services and produced within a country borders in a given year. It includes all production or income earned with the US by US and foreign producers.
It excludes production outside of the US even by Americans.

GNP (Gross National Product): The total value of all final goods and services produced by Americans within the given year. It includes production or income earned by Americans anywhere in the world, it excludes production by non Americans even in the US.

FORMULA FOR GDP
C(Consumption 67%)+ Ig (Gross Private Domestic Investment 18%)+ G(Government Purchases 17%)+XN(net export -2%)

Included into GDP
C
IG
G
Xn

Excluded from GDP
Intermediate goods-inputs used to make final goods
avoid double counting or multiple counting
used or secondhand goods
stocks and bonds
no production
unreported business activities
gifts and transferred payments (public or private)
illegal activity
underground
non market activity

Expenditure approach:
C+IG+G+XN+Proprietors income

Income approach:
 W(wages)-compensation of employees/salaries
  +
R(rents)- income received by the household and business that supply the resources
+
I(interest)-money payed by private business to due suppliers of loans used to purchase capital
+
P(profits)-when you are your own business
Statistical adjustments

Trade Formula:
exports-imports

Budget Formula:
Government purchases of goods and services + government transferred payments- government tax and fee collection
Positive: DEFICIT  negative: SURPLUS

National Income Formula:
Compensation of employees+rental income+interest income+ proprietor's income+ corporate profit
GDP- Indirect business taxes – Depreciation – Net foreign factor payment

Net domestic Product:
GDP- Depreciation

Disposable Personal Income: 
National income-personal household taxes+government transfer payment

Net National product:
GNP- Depreciation

Video above will clearly explain all the notes taken during this post, enjoy!!

February 12, 2017

Circular Flow Model

February 12, 2017


Circular Flow Model- "The circular flow is a model of the economy in which the major exchanges are represented as flows of money, goods and services, etc. between economic agents. The flows of money and goods exchanged in a closed circuit correspond in value, but run in the opposite direction."- Definition based off Wikipedia
From class:  It represents the transactions in an economy by flows around a circle

           Household -  a person or a group of people that share an income

           Business firm- organization that produces goods and services for sale

IF SOME MATERIAL THAT WASN'T COVERED DURING THE NOTES, THE LINK BELOW SHOULD BE A STRONG TOOL TO FIX THE  LACK OF INFORMATION IN THE NOTES