exam 2 MGMT301
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This 2 page Study Guide was uploaded by Julia Staltari on Saturday February 28, 2015. The Study Guide belongs to MGMT301 at Pennsylvania State University taught by Ron Johnson in Fall. Since its upload, it has received 238 views. For similar materials see Management in Business, management at Pennsylvania State University.
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Date Created: 02/28/15
0 when economy is at potential cyclical unemploymentO O structural and frictional never O 0 population ratio fraction of the population that has jobs 0 employedworking age population x 100 Q participation rate o of population in the labor force 0 Iabor force working age population x 100 O on the decline bc retirement disabled americans discouraged of students 0 working age population 1664 years 0 U6 U marginally attached workersdiscouraged workers persons employed for economic reasons 0 marginally attached neither working or look for work but want a job 0 U rate can fall bc workers dropped outdiscouraged or only part time jobs are available they want full time Q inflationpi 0 calculated by Consumer Price Index CPI l pi rate o change in price level I disinflation pigt 0 but falling often seen when economy slows I deflation pilt O 0 money illusion don t take into account inflation when we look at our money which declines the value of the dollar 0 price levels 0 GDP deflator focuses on all goods and services produced in the US 0 consumer price index CPI focuses on just consumer goods 70 I measure of the average change over time from base year to current year in the prices of goods and services purchased by the typical urban family of four I quantity is fixed 0 CPI cost in current year cost in base year x 100 Q inflation and purchasing power 0 as CPI increases purchasing power decreases amount of goodsservices the dollar can buy 0 ex how much would babe ruth s salary be now consequences of inflation O inflation shrinks income I real income yearx nominal income CPI yearx100 O nominal income actual income received 0 real income adjusted for inflation income adjusted for changes in the CPI l growth in real shows increase in purchasing power and standard of living I as inflation rises real income falls l are you better off 0 change in real income o change nominal income o change CPlpi inflation hurts most when it is unanticipated inflation burns americans on fixed income bc their income stays the same while inflation changes interest rate cost of borrowing and the return to lending O nominal interest rate the stated interest rate on a loan saving account certificate of deposit CD I is observable l i r pi 0 real interest rate r is not observable l r i pi
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