Ten Principles of Economics - Part 50

... RICE Q UANTITY P RICEOF Q UANTITY Y EAR OF M ILK OF M ILK H ONEY OF H ONEY 2001 $1 100 qts. $2 50 qts. 2002 $1 200 $2 100 2003 $2 200 $4 100 510 PART EIGHT THE DATA OF MACROECONOMICS a. Compute ... index (CPI) is a measure of the overall cost of the goods and services bought by a typical consumer. Each month the Bureau of Labor Statistics, which is part of the Department of Labor, computes and ... included in GDP. Can you think of how this might cause the numbers in the second column of Table 2 2-3 to be misleading in a comparison of the economic well- being of the United States and India?...

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Ten Principles of Economics - Part 44

... amount of income— $100,000 in our example—were fixed. But, in fact, it is not. Utilitarians reject com- plete equalization of incomes because they accept one of the Ten Principles of Economics ... the form of goods and services rather than cash are called in-kind transfers. Standard measurements of the degree of inequality do not take account of these in-kind transfers. Because in-kind transfers ... poor evolve, the composi- tion of assistance between cash and in-kind transfers changes. Some of the fluctu- ations in the measured poverty rate, therefore, reflect the form of government assistance...

Ten Principles of Economics - Part 47

... the consumer in- creases his purchases of Pepsi from 50 to 150 pints. Panel (b) shows the demand curve that results from this consumer’s decisions. In this way, the theory of consumer choice ... of this time at her computer developing software. For every hour she spends developing software, she earns $50, which she spends on consumption goods. Thus, her wage ( $50) reflects the tradeoff ... and consumption. For every hour of leisure she gives up, she works one more hour and gets $50 of consumption. Figure 2 1-1 3 shows Sally’s budget constraint. If she spends all 100 hours en- joying...

Ten Principles of Economics - Part 49

... Lightens Up 506 PART EIGHT THE DATA OF MACROECONOMICS CASE STUDY INTERNATIONAL DIFFERENCES IN GDP AND THE QUALITY OF LIFE One way to gauge the usefulness of GDP as a measure of economic well-being ... Recessions—periods of falling real GDP—are marked with the shaded vertical bars. S OURCE : U.S. Department of Commerce. 504 PART EIGHT THE DATA OF MACROECONOMICS The most obvious feature of these data ... that for- eigners earn here. For example, when a Canadian citi- zen works temporarily in the United States, his production is part of U.S. GDP, but it is not part of U.S. GNP. (It is par t of Canada’s...

Ten Principles of Economics - Part 1

... ather part- time job for some extra spending money.scarcitythe limited nature of society’sresources economics the study of how society manages itsscarce resourcesCHAPTER 1 TEN PRINCIPLES OF ECONOMICS ... ideas. In the rest of this chapter, we look at Ten Principles of Economics. These principles recur throughout this book and are introduced here to give youan overview of what economics is all ... measures of the qual-ity of life. Citizens of high-income countries have more TV sets, more cars, betternutrition, better health care, and longer life expectancy than citizens of low-incomecountries.Changes...

Ten Principles of Economics - Part 2

... studying the short-run and long-run ef-fects of a change in the quantity of money.ECONOMIC MODELSHigh school biology teachers teach basic anatomy with plastic replicas of the hu-man body. These ... they al-low us to illustrate and evaluate economic theories of the present.THE ROLE OF ASSUMPTIONSIf you ask a physicist how long it would take for a marble to fall from the top of a ten- story ... consists of dozens of countries, each of which produces thousands of different types of goods. But by as-suming two countries and two goods, we can focus our thinking. Once we under-stand international...

Ten Principles of Economics - Part 3

... is not always straight-forward. This tendency is rooted in one of the Ten Principles of Economics in Chap-ter 1: People face tradeoffs. Economists are aware that tradeoffs are involved inmost ... less of the other. When the economy moves frompoint A to point C, for instance, society produces more computers but at the ex-pense of producing fewer cars.Another of the Ten Principles of Economics ... just the sum of the activities of all these decision-makers in all these markets.The field of economics is traditionally divided into two broad subfields.Microeconomics is the study of how households...

Ten Principles of Economics - Part 51

... that nominal andreal interest rates often do notmove together.SOURCE: U.S. Department of Labor;U.S. Department of Treasury.524 PART EIGHT THE DATA OF MACROECONOMICSchanges in interest rates, ... raises the price of its cars. BecauseVolvos are made in Sweden, the car is not part of U.S. GDP. But U.S. consumersbuy Volvos, and so the car is part of the typical consumer’s basket of goods.Hence, ... deflator and the con-sumer price index show high rates of inflation. In the late 1980s and 1990s, bothmeasures show low rates of inflation.520 PART EIGHT THE DATA OF MACROECONOMICSQUICK QUIZ:...

Ten Principles of Economics - Part 52

... experienced more rapidly growing productivity.Indeed, one of the Ten Principles of Economics in Chapter 1 is that a country’s stan-dard of living depends on its ability to produce goods and services.Hence, ... the quan-tity of inputs used in productionand the quantity of output fromproduction. For example, sup-pose Y denotes the quantity of output, L the quantity of labor,K the quantity of physical ... sense of how much the level andgrowth of living standards vary around the world. Second, we examine the role of productivity—the amount of goods and services produced for each hour of a work-er’s...

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