STUDY GUIDE MIDTERM TWO FIXED
STUDY GUIDE MIDTERM TWO FIXED ECON2020
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This 3 page Study Guide was uploaded by Morgan Genelin on Sunday April 10, 2016. The Study Guide belongs to ECON2020 at University of Colorado taught by Murat Iyugan in Winter 2016. Since its upload, it has received 241 views. For similar materials see Principles of Macroeconomics in Economcs at University of Colorado.
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Date Created: 04/10/16
FINDING CHANGES OVER TIME NEW−OLD OLD Adult Population Everyone18+¿ (nomatter if unemployeed∨employeed) Labor Force U+E=LF U+E Labor Force Participation Rate ∗100 Adult Population U Unemployment Rate Labor Force∗100 P t+1 −P(t) Cost of inflation P(t) ∗100=π Real inflation Rate D (t+1)= D t)(1+r) P(t+1) P t) Fisher Equation i=r+π Rule of 70 70 %growthrate =years¿double Future Value Equation initialvalu(1+rate)numberof years Present value equation Futurevalue (+rate )umber of years Initial rate of return ∑ Return per year (1+rate)ear Marginal Propensity Consumption (mpc) Change∈Consumer Spending Change∈DisposableIncome Spending multiplier 1 Increase of spending (change numerator to the increase) 1−mpc Aggregate Planned Expenditure *** Whenever a reduction in planned spending, multiply by the spending multiplier and subtract that from the original equilibrium.*** With consumption function factored in Y=AE =C+pp Addition of G adds to Ip Y=AE =a+ppc (Y−T )+Ip Marginal Propensity Savings (mps) Labor Productivity 1−mpc Y=Te∗ (K∫,H ,L ,N) “PER CAPITA” Thethingyouwant percapita GDPusually ) Population∨¿ people Y: Income/GDP C: Consumer Spending G: Government Spending T: Tax I: Investment Ip: Planned Investment Iu: Unplanned Investmen S: Savings NX: Net Exports (ExportsImports) K: Physical Capital H: Human Capital N: Natural resources L: Labor mpc: marginal propensity consumption Slope a: Intercept of what C is when YT=0 Y = C + I + G + NX Finding GDP in an open economyu Y – T Disposable INcome Y – T – C Private Savings T – G Public Savings G T Government Budget Balance Y – C – G National Savings (I – S) +NX = 0 National income Accounts I = S ^^^^ in a closed economy C = a +m mpc (YT) Consumption function Frictional Unemployment: Natural cycle between workers and jobs Structural Unemployment: Natural cycle with the business cycle: recessions and depressions and such Cyclical Unemployment: Short term Facts: GDP grows on average 1%2% per year It is a phenomenon that people that are less well off (poor) die earlier Side Notes: (I – S) > 0 Surplus (I – S) < 0 Deficit G>T Budget Deficit G<T Budget Surplus EX>IM trade surplus, outflow IM>EX trade deficit, inflow
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