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q describe about capitalby capital we characteristically mean manufactured goods which are used to produce other services and goods though arent used
four different measures of gdpusing circular flow model we see that there are 4 equivalent ways of measuring gdp using the definition market value
q describe about components of gdp by considering all arrows to and from the goods market we see that y im c i g x left hand side is the value
the government rest of the world and the financial markets total expenditure of government can be divided into two parts transfers to private sector
private sector in the circular flowthe private sector total income is known as the national income because private sector receives the entire return
one problem in using exchange rate when comparing gdp per capital between countries is that is fluctuates a lot a way of avoiding dependence on
q define do you mean by gdp growthby nominal gdp-growth we mean the percentage change in nominal gdp over a specific period of time real gdp growth
q construction of real gross domestic product to be able to make reasonable comparisons of gdp over time we should adjust for inflation for instance
q what do you mean by gross domestic productperhaps the most significant concept in macroeconomics is gross domestic product gdpgross domestic
q define effective exchange ratesuppose that we are interested in external competitiveness of a country lets say japan to do this we could look at
q show the changes in the exchange rateassume that united states is our home country and the current euro exchange rate in direct notation is sd 15
q define exchange rate systemsdifferent nations have different exchange rate systems the most significant characteristic of an exchange rate system
q what do you mean by exchange rateexchange rate is defined as the price of one unit of currency in terms of another currency if one euro costs 15
q what is inflationinflation between two points in time is defined as percentage increase of price index between these two points in time comments
q explain the problem involved in consumer price indexto explain the problems involved in calculating cpi we consider mp3 players if you measure the
q what do you mean by price indexbecause we are only interested in percentage change of the price level and not particular value we can divide every
q describe about price level and timewe are hardly interested in the value of price level at a certain point in time what we are interested in is
q define the prices and price levelprices are of great significance in macroeconomics as undeniably they are in microeconomics though in
i used to think that economic growth more production was only possible able to occur because banks lent out more than they had fractional reserve
define the term - productivityproductivity is the concept which measures how outputs can be maximised from given inputs in factories labour
determine the exchange ratewhen a currency is freely floating the central bank doesnt have to set monetary policy to alter the external value of the
determine the term - hot moneya large hot money inflow shifts the demand curve for currency to the right leading to exchange rate rising and to an
what is independent monetary policyadvantages first in a freely-floating exchange rate the exchange rate must move down or up to correct a payments
what are the international economic crisisa current account surplus can only take place in one nation if there is a current account shortage in
determine the long-term direct investment flowslong-term direct investment flows are when investors buy physical assets like land or capital