TAILIEUCHUNG - Lecture Principles of economics (Asia Global Edition) - Chapter 16

After completing this chapter, students will be able to: See why inflation results from rapid growth in the money supply, learn the meaning of the classical dichotomy and monetary neutrality, see why some countries print so much money that they experience hyperinflation, examine how the nominal interest rate responds to the inflation rate, consider the various costs that inflation imposes on society. | Inflation and the Price Level Chapter 16 McGraw-Hill/Irwin Copyright © 2015 by McGraw-Hill Education (Asia). All rights reserved. Learning Objectives Explain how the consumer price index (CPI) is constructed and use it to calculate the inflation rate Show how the CPI is used to adjust dollar amounts to eliminate the effects of inflation Discuss the two most important biases in the CPI Distinguish between inflation and relative price changes to find the true costs of inflation Summarize the connections among inflation, nominal interest rates, and real interest rates Keeping up with Grandpa Prices of goods change over time Adjust values, incomes, or spending for change in prices Constant purchasing power Baseball salaries Bruce Lee earned US$500,000 in 1973 Jackie Chan earned US$15 million in 2007 Inflation increases uncertainty when planning for the future Consider costs of inflation 3 Measuring the Price Level The Consumer Price Index (CPI) is a measure of the cost of living during a particular period The CPI measures The cost of a standard basket of goods and services in a given year relative to the cost of the same basket of goods and services in the base year Base year for the CPI changes periodically, normally it changes every five years Calculating the CPI 2013 Spending Monthly Cost in 2013 Rent (2 bedroom apartment) $500 Hamburgers (60 at $2 each) 120 Movie tickets (10 at $6 each) 60 Monthly expenditures $680 2018 Spending Monthly Cost in 2018 Rent (2 bedroom apartment) $630 Hamburgers (60 at $ each) 150 Movie tickets (10 at $7 each) 70 Monthly expenditures $850 Calculating the CPI CPI is the ratio of the cost of the basket of goods in the current year to the cost in the base year Base year cost $680 2018 cost $850 CPI = (850 / 680) (100) = Cost of living in 2018 is 25% higher than in 2013 CPI for the base year is always 1 CPI for a given period is the cost of living in that period relative to what it was in the base year Statistical authorities .

• Kinh tế học
• Principles of economics
• Lecture Principles of economics
• Money growth
• Quantity theory of money
• Monetary equilibrium
• Money supply
• Ten principles of economics
• People face tradeoffs
• Opportunity cost
• Marginal changes
• Economics of information
• Consumer choice
• Free rider problem
• Market transactions
• Welfare Economics
• Consumer surplus
• Demand curve
• Efficiency of markets
• Nature of an externality
• Market inefficiency
• Negative externalities
• Principles of microeconomics
• Lecture Principles of microeconomics
• Scarce resources
• Scarcity implies choice
• Choice implies cost
• Principles of agricultural economics
• Agricultural economics
• Economics of agricultural production
• Theory of consumer behaviour
• Economics of market demand
• Dynamics in demand analysis
• Analysis of agricultural markets
• Agricultural markets
• Economics of trade
• Costs of taxation
• Deadweight loss
• Laffer curve
• Supply side economics
• Market forces
• Supply and demand
• Market economies
• Competitive Markets
• Thinking like an economist
• Economic models
• Circular flow diagram
• Production possibilities frontier
• The gains from trade
• Production possibilities
• Comparative advantage
• Absolute advantage
• Costs of production
• Total revenue
• Total cost
• Opportunity costs
• Price elasticity of demand
• Price elasticity
• Midpoint method
• Demand curves
• Factors of production
• Demand for labor
• Production function
• Marginal product of labor
• Controls on prices
• Price ceiling
• Price floor
• Market outcomes
• Theory of consumer choice
• Budget constraint
• Indifference curve
• Marginal rate of substitution
• Measuring nation’s income
• Economy’s income
• Gross domestic product
• Components of GDP
• International trade
• Determinants of trade
• Equilibrium without trade
• Production and growth
• Economic growth
• Monetary system
• Functions of money
• Federal reserve
• Central bank
• Open economy macroeconomics
• Economy macroeconomics
• Closed economy
• Open economy
• Public goods
• Common resource
• Types of goods
• Cost benefit analysis
• Aggregate demand
• Aggregate supply
• Short run economic fluctuations
• Economic fluctuations
• Tax system
• Federal Government
• Marginal tax rate
• Budget surplus
• Macroeconomic policy
• Debate over macroeconomic policy
• Stabilize the economy
• Monetary policy