Wu ALA pied sls rT GDP: (Natzonal Insoone) Hig the mantet value op all final g cools onal / whilhdn a. county in a Len peed GN : : = 4s the total Income guned by 0 Nation's b sesiclents (catleol Nationals). Te dip pon proras GDF De that he it Includes income that our out cibigens tart Abroad and xcludes income that pocgnu soraned dene. v NNP ~ bp the total income 4a nations Seaidents (GNP) minus tere from depreciation. bipuciation ea a Sn asi ah ona lecomony atoch of sapdioprosnits and sturctroues such ob kok suating and all Computer models aecoming erbeotatt lobar obslete . f ior includes alt of the various fourm Sf spending, oj domestically eg: Food » cars Soirert y Aousichantng rues. Y= (+l+G+NXGalea nije cata items as hainuts and medical cane. Iaetment is purchase af copltal gecdls That will 4 Hin Hu faba £0 phrooluce wou goods & sericien Real us Nominal GDP : a - Nénibral GDP valiuA Au. production: ef goods and. dwniites at cumunt prices: ~ [Riot GDP volue the prmduction of goods and durwin) lat conutant puired - Year Price of Quantity Price of Hot Deg of HD Hambunger of HB R005 $l loo $2 50 £006 cu 150 $3 Root $3 290 $4 Caketating Neriinal GDP: 2005 ($1 per 4 Lotdeg «100 hotdog) +(42 per hambun x 50 hamburg) = $200 6 C$ 2 per hotelog x150 AotoLoge) +($ 3 poor hambur 100 tambusyed) = $ 600 OF: ($3 per hotdog *200 Lotdoge) +($ 4 per 150 dambusgers) =$1,200 elabi Rat GDP: 2005 + (lx (o0)+ (2x50) =$200 2006 + (1x 150) + (2100) =$ 350 200% : (tn 200) + (a *I50) = $500raleutated a4 The Nominal GDP te Read DP tints 100. Tp tella us ushat wig fe worminal CDP that ts metho dbnoataies Te PEER Than a hise inthe quantities p L. BE’ GDP Diflator t.. 4005; 200 = eas xloo= [00% 200 200 600 Be = twee x aa ! 200% . L260" wo = 240% | por |Reot Gor. = GOF Deflater in Year 1) Ynflacion kate iv Lhe yeas 2 = GDP Dadlatot the Yeon? GDP Deflator in The Your 7 hoes => I#l-l00 | 100 = WK 100 toot 7 2ho -/#! 100 = 40.3% Fe 4 This GP uo goad, mansurt of seonsmuic. aueblbeing GD? in the beat bimnpole wveosure gp somone milling of —teorepry aocieby » Gr fer person Belle os Tie incorne wxeperditre of euunage psn in the Sererot A AOE. papergrid ~ Date: / / 1 High ABR spn purser indicates a higher stardasd fing - 3 la. 7 Vv : 7. toll qtuities tat Outside ‘tit tors pla forents Monkets auch as value of Amey ! waite the chilolnen ! wok Value of uslunteenpapergrid Manawrs the cout of Lining : Condumtn Price Index - deals iuith Dour economists reaaine [ou ovanoll cost of Living » +The CPI is sed. tp moniter charges in Du cost of oun finne. biker CPI ses the tegpicol famity Las to apind PPM monty te maintain His ame standard 2} “Ths Inflation. fapscre fo 4 Lidiabion. in whieh the Leoneniied ousrall price lousl is sining bon fate lu the ponentage change in the price owl thom tu prunis poried Cig ameasuns #4 the ounalli costo} § goodA_ ond Aerie bought iy 0 Aypical conuimet T Jp The Bureau of habour Statistics (ous) CoE cri tuty month. Th is ud io monitor changes sin the coat op. Heus the CPI ia caleutloted : DFixn the Basket : pesnbe ts - The BLS identifies o basket 01 goods 2 couices , That in tetal Bosds -and svuices , bypical consurned wise +The BLS condieets a congeemens monthly Br bo ah werd uh She weights “fot the pris Y goods oad units » 2> Find the Prices: + Find the prices of wach of goods > asnuitea in The Ladeet, Compute the barketiroct + Uae the hate on prices 42 catuttate The cout 4 the barrel fg cods % cenucces ab dif fanent feces Hires. AS* Choose a base ytor and omfucte the inclex : + asigring Disignate. | year os aw bose yor makingpe re epee CP) in CPI iy spas 4 égs-|| Calculate CPI ‘ < y eOndiimend nl goons | Basket = I, Lot dogs Step: 2 Find the price of ench good in 2ach + Yoon Puce of Hed dog Paice of chore dye\ 2005 gl $2 2006 $2 $3 200+ $2 he Step 3 Combute tr cost of goods of bavteet of each 2005 = Hx = 2x2 = Y 8 2ooe = 4x2 = % a3 26 1 Loot = 4x3 =12 any= BB 20) L Steps 4 ae a 2005, = @ y. loo = loo ZK 4 4 2006 = {# too = I#5/ reedoa] ~RO=13E x Joos Bee 42 US FW PRS | Basket 4 aoods cost in Year 2o0a = $200 Barkit oF goods wet in Year 200 4 = $1246 Find oul) OF! and Inflation : i fina :d|| CPI = 1236 x PO = 103% 1200 | : Inflation = J236- 1200 , joe = 37 J20e PROBLEMS IN MEASURING THE CosT OF Living : Bu deleted goodu Chat rake “CPI uw an cemrabe mensume 4 | nltoduct on oy new ors 1 Urmwagured quali anges Substitution biased? The basket docs ei lage tend Seente poi of TO co aed alls pron \neean fo tr| byt te a dollar decors even 4 Ba ok » The volt of pu of Ba grok abnag She Som Ta BLS vies eo odpusl Thun prise fot Or | amc quality » buts such dif fererets eal - i [Thy eubstsbetion bine, Anbrcduction of 2S YT || wnrunsred quality AOS Coun tre nd [The 3 Ls Lenpotanh bavause mary " sett - | pregermes ut the CPi te adjisaT_fpA | the ererolh deuce at pricts. [- The C21 ovenstates inplation bay about |Oph _Daplaton Vs. CPI [GDP Deflalor 6 calectated as 4 _iprvinal 100 Reat The BLS caleulotes thir pri ae - ? } dncleces uch The indo = differen Aeaiers wuthin The . Be TT county vindese, 8 fa ok both the GDP deflate avcl OP! to k ed) pace ane Adin * VT ons 2 einportant alijferrnces 40 indices - thet an cocene there dinerge The GDP Dapladot aufleck the print of of goods ord ; ok alomustiin lly uksrsase the CP) seflects he. puces Y ell qoeds and dnurres bougth by torrumers T_ eThe CP 1 conmpares tre of 2 ped boshel_of and seri fo the prec 4) the basket in the boar gt (enty eccant Y dacs Tha BLS change Te basket where tha GDP Deflator connotes the price of camrently produced goods and termuctt Xo _the pier of same goods & sounices din the bose yer’ NOMIC VARIABLES For THe EFFECTS CORRECTING 6c0 OF UN FLATION ¢ Puce indices Ate uhen comparing dolla figuate. pom 410,26 BIE Z, Thangs of = 45%0090 ~ 46,000 x 198 = 4. 62,141 Is 2 INDEXATION: volin some della ameart is nutorobially ousted db inflaton by law ot cordiact . te amount Ls said t Moo Inolaxedd fet inflation REAL AND NOMINAL INTEREST RATE : Je Interest AcPteaente a payment in the fuse fos & Dany ¢ Money - + Nominal Intersect Rote U the intergt tate sepotted » not coaccted for i@lation. Fes_eg: It us intetoat rate that a band pa pays | Roal interert cake U the intern? Bate thal + coructed JO the oye 2 inplation | lah Reet Indercrd Rate = Nominal Interest Rate — |efe: The ptrson calied A hecrorsued $IPOO 2s Lagean + a Nominal interogt Sate eas 15/5 inflation tate (0% foal Intersst Rate = 16/107 ri aDate: ; , As b ae Acountiy’s standard of Living dipptrds upon tb Within a courdthy, Thins ore large changes in shy t In he “VS, Duen the past unlivuy autnage income etomwd by deal GOP pir person das grown abe sho . . T mr A_raten's Hordand of Juning ds dturrmined Ip Spe Peluctincty 3) it wuothons. ot Paper.” hw He product goods and asrmicis a bf Liming owen time . a 2%) ECONOMIC GROWTH AROUND THE WORLD : Lining sterdaras as mead 44 G Reo CDP 4,papergrid Date: 7 7 Whe felon ef prueba, dinilly daria producti “Physical capital iu ty sbsck of equipmurt Ord Suctin tat are unl £0 prodluct qpols and a serices . = Physical enpital i #Tools uted to budkd of wpa abormobi les Tol. saad 49 build furniture # Oftie buildings , sebeols dow... —Fhyeicot capital Uo produced factor of production *ltu on input inte the production process thot in. he post was an sulfub from tu production process. * Biman capital pir useiken ls The Euonowist' s tour fet the knowledge and skills thot workers acquire wiiebon Baling Msaptnteres + hicks phypical copital,” Luman capital saises the rations ability te produce ffeadls bain Nabustal Resources : = ane inputs used in production that are prouided by Datu, tuck ou land , Aimed and wrinerck olefrasite = tenuvoable susounces Inchude tres ond 5 ~ npn -derowoble Susourcss irclilde and coal e Q Resources can be Irportant but are not ruestoiily| ayer oh sprooleectine, in producing gocds and sramices Tecknolagiual Krousledge : minelede, society 4 undustanding of the best ways to Produs yeods and demices. 5 capital inchucles the moines expended thansmbtig ths undvatanding bo the Lebour. forPRodvETION FUNCTION * tlle economaly often ust 2 productiar prcGon te é [thy rilationship bebucen tre quantity of inputs sused,j, woduction ond the quantity of butpul frcrn product, We y= AF (1, k, H,N) A = tchrologeal deasleprant {availble peduscter ted F = function ©f Y= Quantity of output L = Quantity Jabour k = Capital [Quantity of Physical Gpitoal H = Human Rerowrees [Quantity oy Hurran Copital N Ratio Resows cea __F Lb a function +: Abou Sow the Lnputs anu combined - A podution function fas wenctart dena ts cols i iy positive snumber ow “zy = AF (ux, kx, Hx,Na) te, doubling of all inputs corees the amount of to Movble as uoll. | Production Function «ith conclant tetwua £6 sede bow an interesting implication : - ee ee | H/é = Haman topital per wsoiess setting x = Ve, then y/e_= AF(1, Kk» Hie, n/O) klk = phaysicol capital per urorken {| __— fen snips th fw physical capital pA worden [K/L Bu state of technolory (A) eee —papergrid Date / 1 ECONOMIC GROWTH AND Bo6¢ GOVERNMENT POLICIES: Gprirnment Policies UBe = faised fradssctiit aod ling A ARPURD gE soUing and inmectmert pamounnge Inmusovent fiom fhtoad . Tencouras tducation abd Laintug weet blist evar Popes, Aights Vand maintain fettial etobiliby | s promote tree rade } promote leap SAVINGS AND INVESTMENTS + Jway te Boise Juteou puod. Ailey Pa curment stsacchees dn drooluction® Y Ai DIMINISHING] RETURNS AND THE CATCH ri EFFECT? +s the stock oy enpital rises, Bu sates plot padi. pase This prcherty Buause of of diminish Kabra grt inctante in the sauings tate heads. 10 highir grout only pono white - pin Dw Long tun, the higher soutngs tate BERL leeds 10 a. ighsn Lonel sf prudustioityy and income, but rot kighan sppousth in Haat ors Output fbr cana ae | ‘pital cuorsen Ly [LLUSTRATING PRoDuctTioN FUNCTION: ENF tal , an txt, whan tuontnay fas A. ap ak + “apn ’ ‘ ry danger ancxease in Ont, nt of capital, sade SA 7 anne shin aconenuy aso Lig’ seni _of ait ball fo a small crease uf tt a forma | # Fetign Ditect truseabrent | Se i the pital inuesbvent sm cured ond. { epoated forsiign senile [ wet Fouign fovfelio (nuestment eb ie the instectment pisorud & sith by fotuion, { money but pirated je iuaidends. | [ke Education Bt Foto contigs Leg: turn _ tducation 1 | N at hast a4 inpottant a Sraucctrvent 0 ph sical tal { in th USM, aach yan = #0" _q tehooleng sauits a parton 4 wa on a about (0'/.HEALTH AND NUTRITION + *Healthisie Luckie ane a + Yeod Lrwastmrents in the a. ath the jon Care Mad de irsiaw in liaing stan se A bp Countries can ale aut wcgt in a be PROPERTY RIGHTS AND POLITICAL _§¥ sraBiL ITY: t | + Property Rights tefec to the ability 4 propels fe exeheise— Quthoriky our the REAOUMCLA they pom OLN « tAn sconory imide arespoict fox picopercty sughts Lu an dnrvpertont pie sequicite jo thu price system 26 1u6h. sTt bb rca Jor tnucstou ts fect that the investments Ore deceree FREE a Trad a woe) a type of tecknolegy, | A county Hat sliminectu trade restrictiont sill experione the same ind | ecorvorwic qproutth thot weld scan ter a. pea omnajor ternslegial adwvors Some Counter engage in iward &iented Draole polis, eect cling with ether counter, Ou eu inten ction + Some puntales sngoge dun eutword eerted Trade policees, senupusaging seroction uth chi wuntris PMENT. a RESEARCH AND DEVELO Lt advana 4 tuhnologionl browled ye lad t0 persstandand + dining « * Moc technolo adwana komts drom, pivots Neseay Jum ard indivcdual inmenterts . Gewnemunt can orcouinge tha deielopment of sus tuchnolegies through tusanch guunts, ax hunks and bud debe patend aatom- S POPULATION GROWTH: 4 and. othe social scienmsts Lowe Long debat Agus popitation. youth. AfecLs a a othe. foeton + » Pofeuslab on ypesucil, interacts Lucth, production + ads 2 natiisal ILO HCL 4) Ddluting te capital stock > promoting technological progr. aeenat ft ae re inn 2 te ees“ Ma scket — pi ianual syst af Wag Lup of inakitution t Te 2p — nermy that 7 22 match one pe prion 4 inuttmaent, another teton 4 sawing Lith tit mous the seonomiga? s waves — # AuoUuNCed IXgm satin Ou : 7 we Lorreuws ‘ aa INSTITUTJONS : D |The faroncial system iu smaole up 7 ferancal incttuhorn that to-ordinate the wtions of cae and hersorucres 2> || Financial inatlution, ean be Tanouped Ante 406 Aid omen hategoties . a> Fbnanckal market b> Financial intermedimees ly Fénanciol markel ave the instibetions thrdugh wbich v pe tan ditetty prouide funds to the borvowers Tine type of Firancial sores ane: * Bond Masdket * Steck Market. > Bend wouvat - A bond ua csi of irda hat conics feciping Mbligation! 2h berbuen te Pa fallin’ gp “the thomdn 2 2- er papergrid | Cate 1 | ee Se Senet: £25 ll Texm - the Length wf ime wntel the hard srativus. rgth ef tha he