Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Chapter 13.2 GDP & Changes in the Price Level Warm-Up: What do you think the picture means? Explain. Answer: Time and money lose value Why? Inflation Decrease in value of purchasing power as the result of demand for more goods than producer can supply Constructing A Price Index 1. 2. 3. 4. Inflation: a rise in the general price level Price Index: a statistical series that can be used to measure changes in prices over time Steps to Constructing A Price Index Base Year: A year that serves as the basis of comparison of all other years Market Basket: a representative selection of commonly purchased goods & services Record the price of each item Total the prices (= the base year market basket price & assigned a value of 100%) Major Price Indices Consumer Price Index: reports on price changes for about 80,000 items in 364 categories http://data.bls.gov/cgi-bin/cpicalc.pl Producer Price Index: measures price changes paid by domestic producers for their inputs Implicit GDP Price Deflator: an index of average levels of prices for all goods and services in the economy Real vs. Current GDP Current: when GDP is not adjusted to remove the effects of inflation Real GDP or GDP in constant dollars: when the distortion of inflation has been removed Real GDP= GDP in current dollars X 100 implicit GDP price deflator