motivated monday, october 28 turned-up tuesday, october ......motivated monday, october 28 turned-up...

Motivated Monday, October 28Turned-up Tuesday, October 29

❖ With a partner, guess how much you would need in today’s money to have the same purchasing power as $100 in the following years:

1. June, 19682. May, 19863. October, 2000

❖ I can define inflation and CPI. I can calculate inflation.

❖❖❖

https://www.usinflationcalculator.com/https://www.usinflationcalculator.com/

Class Expectations□ No phones□ When I am giving you notes or instructions:

■ Sit up, listen, take notes, remain silent, raise your hand for questions.

□ During independent work:■ I will be working with each group during class.■ Your group should be on task, seated, and with voices at a

reasonable level.

Unit 1b Test Corrections

Unit 2: Macro Measures --

Price Stability4Copyright

ACDC Leadership 2018

With your neighbor, talk about what you think are some of the top money-making movies of all time.

Rank Title(click to view) Studio Lifetime Gross Year^

1 Star Wars: The Force Awakens BV $936,662,225 2015

2 Avatar Fox $760,507,625 2009^

3 Black Panther BV $700,059,566 2018

4 Avengers: Infinity War BV $678,815,482 2018

5 Titanic Par. $659,363,944 1997^

6 Jurassic World Uni. $652,270,625 2015

7 Marvel's The Avengers BV $623,357,910 2012

8 Star Wars: The Last Jedi BV $620,181,382 2017

9 Incredibles 2 BV $607,490,664 2018

10 The Dark Knight WB $534,858,444 2008^

11 Rogue One: A Star Wars Story BV $532,177,324 2016

12 Beauty and the Beast (2017) BV $504,014,165 2017

13 Finding Dory BV $486,295,561 2016

14 Star Wars: Episode I - The Phantom Menace Fox $474,544,677 1999^

15 Star Wars Fox $460,998,007 1977^

https://www.boxofficemojo.com/alltime/domestic.htm?page=1&sort=gross&order=ASC&p=.htmhttps://www.boxofficemojo.com/alltime/domestic.htm?page=1&sort=title&order=ASC&p=.htmhttps://www.boxofficemojo.com/alltime/domestic.htm?page=1&sort=studio&order=ASC&p=.htmhttps://www.boxofficemojo.com/alltime/domestic.htm?page=1&sort=gross&order=ASC&p=.htmhttps://www.boxofficemojo.com/alltime/domestic.htm?page=1&sort=year&order=DESC&p=.htmhttps://www.boxofficemojo.com/movies/?id=starwars7.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=avatar.htmhttps://www.boxofficemojo.com/studio/chart/?studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=marvel2017b.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=marvel0518.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=titanic.htmhttps://www.boxofficemojo.com/studio/chart/?studio=paramount.htmhttps://www.boxofficemojo.com/movies/?id=jurassicpark4.htmhttps://www.boxofficemojo.com/studio/chart/?studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=avengers11.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=starwars8.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=theincredibles2.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=darkknight.htmhttps://www.boxofficemojo.com/studio/chart/?studio=warnerbros.htmhttps://www.boxofficemojo.com/movies/?id=starwars2016.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=beautyandthebeast2017.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=pixar2015.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=starwars.htmhttps://www.boxofficemojo.com/studio/chart/?studio=fox.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=starwars4.htmhttps://www.boxofficemojo.com/studio/chart/?studio=fox.htm

14 Star Wars: Episode I - The Phantom Menace Fox $474,544,677 1999^

15 Star Wars Fox $460,998,007 1977^

16 Avengers: Age of Ultron BV $459,005,868 2015

17 The Dark Knight Rises WB $448,139,099 2012

18 Shrek 2 DW $441,226,247 2004

19 E.T.: The Extra-Terrestrial Uni. $435,110,554 1982^

20 The Hunger Games: Catching Fire LGF $424,668,047 2013

21 Pirates of the Caribbean: Dead Man's Chest BV $423,315,812 2006

22 The Lion King BV $422,783,777 1994^

23 Jurassic World: Fallen Kingdom Uni. $416,769,345 2018

24 Toy Story 3 BV $415,004,880 2010

25 Wonder Woman WB $412,563,408 2017

26 Iron Man 3 BV $409,013,994 2013

27 Captain America: Civil War BV $408,084,349 2016

28 The Hunger Games LGF $408,010,692 2012

https://www.boxofficemojo.com/movies/?page=releases&id=starwars.htmhttps://www.boxofficemojo.com/studio/chart/?studio=fox.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=starwars4.htmhttps://www.boxofficemojo.com/studio/chart/?studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=avengers2.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=batman3.htmhttps://www.boxofficemojo.com/studio/chart/?studio=warnerbros.htmhttps://www.boxofficemojo.com/movies/?id=shrek2.htmhttps://www.boxofficemojo.com/studio/chart/?studio=dreamworks.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=et.htmhttps://www.boxofficemojo.com/studio/chart/?studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=catchingfire.htmhttps://www.boxofficemojo.com/studio/chart/?studio=lionsgate.htmhttps://www.boxofficemojo.com/movies/?id=piratesofthecaribbean2.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?page=releases&id=lionking.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=jurassicworldsequel.htmhttps://www.boxofficemojo.com/studio/chart/?studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=toystory3.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=wonderwoman.htmhttps://www.boxofficemojo.com/studio/chart/?studio=warnerbros.htmhttps://www.boxofficemojo.com/movies/?id=ironman3.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=marvel2016.htmhttps://www.boxofficemojo.com/studio/chart/?studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=hungergames.htmhttps://www.boxofficemojo.com/studio/chart/?studio=lionsgate.htm

IS THERE A PROBLEM WITH THESE NUMBERS?

DOMESTIC GROSSESAdjusted for Ticket Price Inflation*

CHART NOTES

* Adjusted to the estimated 2018 average ticket price of $9.14. Inflation-adjustment is mostly done by multiplying estimated admissions by the latest average ticket price. Where admissions are unavailable, adjustment is based on the average ticket price for when each movie was released (taking in to account re-releases where applicable).

^ Indicates documented multiple theatrical releases. Most of the pre-1980 movies listed on this chart had multiple undocumented releases over the years. The year shown is the first year of release.

Most pre-1980 pictures achieved their totals through multiple releases, especially Disney animated features which made much of their totals in the past few decades belying their original release dates in terms of adjustment. For example, Snow White has made $118,328,683 of its unadjusted $184,925,486 total since 1983. Click here for a full discussion of adjusting for movie ticket price inflation.

https://www.boxofficemojo.com/about/adjuster.htm

Rank Title (click to view) Studio Adjusted Gross Unadjusted Gross Year^

1 Gone with the Wind MGM $1,846,687,900 $198,676,459 1939^

2 Star Wars Fox $1,628,013,100 $460,998,007 1977^

3 The Sound of Music Fox $1,301,676,500 $158,671,368 1965

4 E.T.: The Extra-Terrestrial Uni. $1,296,548,600 $435,110,554 1982^

5 Titanic Par. $1,238,925,300 $659,363,944 1997^

6 The Ten Commandments Par. $1,197,340,000 $65,500,000 1956

7 Jaws Uni. $1,170,640,400 $260,000,000 1975

8 Doctor Zhivago MGM $1,134,598,100 $111,721,910 1965

9 The Exorcist WB $1,010,876,400 $232,906,145 1973^

10 Snow White and the Seven Dwarfs Dis. $996,260,000 $184,925,486 1937^

11 Star Wars: The Force Awakens BV $988,172,000 $936,662,225 2015

12 101 Dalmatians Dis. $913,243,700 $144,880,014 1961^

https://www.boxofficemojo.com/alltime/adjusted.htm?sort=rank&order=ASC&adjust_yr=2018&p=.htmhttps://www.boxofficemojo.com/alltime/adjusted.htm?sort=title&order=ASC&adjust_yr=2018&p=.htmhttps://www.boxofficemojo.com/alltime/adjusted.htm?sort=studio&order=ASC&adjust_yr=2018&p=.htmhttps://www.boxofficemojo.com/alltime/adjusted.htm?sort=adjustedgross&order=ASC&adjust_yr=2018&p=.htmhttps://www.boxofficemojo.com/alltime/adjusted.htm?sort=gross&order=DESC&adjust_yr=2018&p=.htmhttps://www.boxofficemojo.com/alltime/adjusted.htm?sort=year&order=DESC&adjust_yr=2018&p=.htmhttps://www.boxofficemojo.com/movies/?id=gonewiththewind.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=mgm.htmhttps://www.boxofficemojo.com/movies/?id=starwars4.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=soundofmusic.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=et.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=titanic.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=paramount.htmhttps://www.boxofficemojo.com/movies/?id=tencommandments.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=paramount.htmhttps://www.boxofficemojo.com/movies/?id=jaws.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=doctorzhivago.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=mgm.htmhttps://www.boxofficemojo.com/movies/?id=exorcist.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=warnerbros.htmhttps://www.boxofficemojo.com/movies/?id=snowwhite.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=disney.htmhttps://www.boxofficemojo.com/movies/?id=starwars7.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=101dalmations.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=disney.htm

13 The Empire Strikes Back Fox $897,371,000 $290,475,067 1980^

14 Ben-Hur MGM $895,720,000 $74,000,000 1959

15 Avatar Fox $889,409,500 $760,507,625 2009^

16 Return of the Jedi Fox $859,703,000 $309,306,177 1983^

17 Jurassic Park Uni. $837,423,500 $402,453,882 1993^

18 Star Wars: Episode I - The Phantom Menace Fox $825,452,400 $474,544,677 1999^

19 The Lion King BV $814,798,300 $422,783,777 1994^

20 The Sting Uni. $814,765,700 $156,000,000 1973

21 Raiders of the Lost Ark Par. $809,287,100 $248,159,971 1981^

22 The Graduate AVCO $782,172,200 $104,945,305 1967^

23 Fantasia Dis. $759,017,400 $76,408,097 1941^

24 Jurassic World Uni. $722,509,700 $652,270,625 2015

25 The Godfather Par. $721,352,300 $134,966,411 1972^

26 Forrest Gump Par. $718,537,700 $330,252,182 1994^

27 Mary Poppins Dis. $714,581,800 $102,272,727 1964^

28 Grease Par. $703,498,500 $188,755,690 1978^

29 Marvel's The Avengers BV $702,694,300 $623,357,910 2012

https://www.boxofficemojo.com/movies/?id=starwars5.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=benhur.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=mgm.htmhttps://www.boxofficemojo.com/movies/?id=avatar.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=starwars6.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=jurassicpark.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=starwars.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=fox.htmhttps://www.boxofficemojo.com/movies/?id=lionking.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=buenavista.htmhttps://www.boxofficemojo.com/movies/?id=sting.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=raidersofthelostark.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=paramount.htmhttps://www.boxofficemojo.com/movies/?id=graduate.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=avco.htmhttps://www.boxofficemojo.com/movies/?id=fantasia.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=disney.htmhttps://www.boxofficemojo.com/movies/?id=jurassicpark4.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=universal.htmhttps://www.boxofficemojo.com/movies/?id=godfather.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=paramount.htmhttps://www.boxofficemojo.com/movies/?id=forrestgump.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=paramount.htmhttps://www.boxofficemojo.com/movies/?id=marypoppins.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=disney.htmhttps://www.boxofficemojo.com/movies/?id=grease.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=paramount.htmhttps://www.boxofficemojo.com/movies/?id=avengers11.htmhttps://www.boxofficemojo.com/studio/chart/?adjust_yr=2018&studio=buenavista.htm

Goal #3LIMIT INFLATION

Country and Time- Zimbabwe, 2008

Annual Inflation Rate-79,600,000,000%

Time for Prices to Double-24.7 hours

Copyright ACDC Leadership 2018

What is Inflation?Inflation is rising general (average) level of

prices in an economy.

Inflation reduces the “purchasing power” of money; i.e., each dollar can buy fewer goods and services than before.


•

•

http://www.investopedia.com/terms/d/deflation.asphttp://www.investopedia.com/terms/h/hyperinflation.asphttp://www.investopedia.com/terms/d/deflation.asp

The amount of Venezuelan Bolivars (worth $1.45) needed to buy 1kg of meat. https://www.bbc.com/news/business-45523636 photo credit: Reuters

https://www.bbc.com/news/business-45523636

• …• Venezuela• Zimbabwe

https://www.youtube.com/watch?v=SCz1x5-tgighttp://www.youtube.com/watch?v=mM3_z2RB3YU

19

What countries had the highest inflation rates in 2017?

1. Venezuela - 1500% due to political unrest and government printing money to pay debt.

2. South Sudan - 661.3% due to civil war and failed monetary policy.

3. Suriname - 77% due to bad policy and economic mismanagement.

4. Argentina - 22% is an improvement from recent years.We tend to see higher inflation rates in developing nations… Why do you think that is?

http://www.in2013dollars.com/articles/countries-with-the-highest-inflation/

How do we measure inflation?

1. GDP Deflator -- inflation of all prices in the economy

2. CPI (Consumer Price Index) -- inflation of prices for goods and services that a typical consumer purchases.

PLAY HARD, ATLANTA UNITED!! WED., OCTOBER 30HAPPY HALLOWEEN! THURSDAY, OCTOBER 31

• Warm-up: Talk to your neighbor about the steps we took to calculate inflation from our shopping data. Also talk about the similarities and differences between the GDP deflator and the CPI.

• Learning target: I can describe how the Consumer Price Index is measured and how it tracks inflation. I can explain who is helped and who is hurt by unanticipated inflation.

1.

2.

3.

CHAPTER 24 MEASURING THE COST OF LIVING

How the CPI Is Calculated4. Choose a base year and compute the index.

The CPI in any year equals:

5. Compute the inflation rate.The percentage change in the CPI from the preceding period.

100 x cost of basket in current yearcost of basket in base year

CPI year 2 – CPI year 1CPI year 1

inflationrate(%)

x 100=

28

What do you think is in the Market Basket?

What do you think is in the Market Basket?

29

30

Where do you think the goods/services

below belong on the graph?

1. TVs2. College Tuition3. New Cars4. Hospital Services5. Toys

Let’s Play the Pyramid . . .

Round 1

Round 11. Burger King2. Real GDP3. Capital goods4. GDP Deflator5. What a turtle would say if it could talk6. Government spending7. Flossing (the dance move)

Round 2

Round 21. What a lion would say if it could talk2. Consumer spending3. The Nae Nae (dance move)4. Pizza Hut5. CPI6. Natural resources7. Absolute Advantage

37

Good Year 1 Year 2 Year 3

1 lb of Apples $1.00 $2.00 $2.50

1 lb of Bananas $.25 $.50 $.75

1 Gallon Milk $1.75 $2.50 $2.75

Cost of Market Basket (COMB)

To get the cost of the basket, add up the prices of all items in the basket in a given year. The cost of each year’s market basket can then be used to

create a price index.

$3.00 $5.00 $6.00

Calculating the Market Basket

In the case above, these are items that would likely be included in the Consumer Price Index, or CPI, because they are items that consumers

would normally purchase.

38

Good Year 1 Year 2 Year 3

1 lb of Apples $1.00 $2.00 $2.50

1 lb of Bananas $.25 $.50 $.75

1 Gallon Milk $1.75 $2.50 $2.75

Cost of Market Basket (COMB) $3.00 $5.00 $6.00

Calculating the Market Basket

Use Year 1 as the Base Year…What is the CPI for Year 1?What is the CPI for Year 2?What is the CPI for Year 3?

100167200

If the base year has an index of 100, what does the index in year 2 mean??

1 10 $4 N/A2 10 $5 25%3 15 $6 80%4 20 $8 78%5 25 $4 -38%

39

Calculating CPIYear

COMB in a given yr

COMB in base yr

CPI (Year 1 as Base

Year)

Inflation Rate

Make year one the base year

$40$50$90$160

$100

$40$40$40$40$40

100125

225400250

Units ofOutput

PricePer Unit

1 10 $4

2 10 $5

3 15 $6

4 20 $8

5 25 $4

40

Practice (Make year THREE the base year)Units ofOutputYear

Nominal,GDP

Real,GDPPricePer Unit

GDP Deflator Year 3 as Base

Year$40$50$90$160$100

$60$60$90$120$150

67 -- N/A83-- 24%100 -- 20%133 -- 33%67 -- -50%

Nominal GDP = quantity x price in given yearReal GDP = quantity x price in base year

Frankenstein Friday, Nov. 1/Monster Monday, Nov. 4Warm up: Discuss with your neighbor (brains only, NO notes!):1. Identify the three goals of all economies.2. Define inflation rate.3. What is a market basket?4. How do you calculate CPI?5. For nominal GDP, real GDP and GDP Deflator, identify which shows us

changes in price, changes in quantity, and changes in both price + quantity.6. List 10 old-school Nintendo games.Learning targets: I can describe who is helped and who is hurt from unanticipated inflation. ★ HW2-6 due NOW★ Unit 2 test will be before Thanksgiving break.

Presidential & Vice Presidential Alma Maters

● Ronald Reagan: Eureka College (Illinois)● Jimmy Carter: U.S. Naval Academy, Georgia Southwestern

College, Georgia Tech● Richard Nixon: Whittier College (California)● Lyndon Johnson: Southwest Texas State Teachers College● Joe Biden: U. of Delaware & Syracuse University Law School● Dan Quayle: DePauw University and Indiana University Law

School

Source: Bruni, Frank. Where You Go Is Not Who You’ll Be: An Antidote to the College Admissions Mania. New York, Hachette Book Group, 2016.

= Real GDP x 100GDPDeflator Nominal GDP

CPI vs. GDP DeflatorThe GDP deflator measures the prices of all goods

produced, whereas the CPI measures prices of only the goods and services bought by consumers.

An increase in the price of goods bought by firms or the government will show up in the GDP deflator but not in the CPI.

The GDP deflator includes only those goods and services produced domestically. Imported goods are not a part of GDP and therefore don’t show up in the GDP deflator.


Is Inflation Good or Bad?


1. If a high inflation rate is predicted, how would different groups of people react?

2. What do you think would happen to people’s willingness to lend money?

3. What do you think would happen to people’s willingness to save?

What if prices are expected to drop?

Nominal vs. Real Interest Rates


Interest Rates and Inflation What are interest rates? Why do lenders charge them?If the nominal interest rate is 10% and the inflation rate is 15%,

how much is the REAL interest rate?Real Interest Rates-The percentage increase in purchasing power that a borrower

pays (adjusted for inflation).Real = nominal interest rate - expected inflation

Nominal Interest Rates- the percentage increase in money that the borrower pays (not

adjusted for inflation).Nominal = Real interest rate + expected inflation

47

If nominal interest rate is 10% and expected inflation is 5% would you

rather be the lender or the borrower?Why?

If nominal interest rate is 10% and expected inflation is 20% would you

rather be the lender or the borrower?Why?

Nominal vs. Real Interest RatesExample #1:● You lend out $100 with 20% interest. Inflation is 15%.● A year later you get paid back $120.

● What is the nominal and what is the real interest rate?● Nominal interest rate is 20%. Real interest rate was 5%.● In reality, you get paid back an amount with more purchasing

power. Example #2:● You lend out $100 with 10% interest. Prices are expected to

increased 20%. In a year you get paid back $110. ● What is the nominal and what is the real interest rate?

● Nominal interest rate is 10%. Real interest rate was –10%○ In reality, you get paid back $$ with less purchasing power.


Good or Bad?In general, rampant inflation is bad because

banks don’t lend and people don’t save. This decreases Investment and GDP.


Effects of Unanticipated Inflation

1. Borrowers-People who borrow money.

2. A business where the price of the product increases faster than the price of resources.

1. Lenders-People who lend money (at fixed interest rates).

2. People with fixed incomes.

3. Savers

Hurt by Inflation Helped by Inflation

If there is inflation, ask your boss for a raise!


But inflation doesn’t affect everyone equally.Identify which people are helped and which are

hurt by inflation.1. A man who lent out $500 to his friend in 1960 and gets paid

back in 2018. 2. A tenant who is charged $850 rent each year. 3. An elderly couple living off fixed retirement payments of $2000

a month.4. A man that borrowed $1,000 in 1995 and paid it back in 2014.5. A woman who saved $500 in 1950 by putting it under her

mattress.


Fun Set 2.2 Parts F & G questions

2008 Audit Exam

2012 Audit Exam

Calculations--Problem Set1. In an economy, Real GDP (base year = 1996) is $100 billion and

the Nominal GDP is $150 billion. Calculate the GDP deflator. 2. In an economy, Real GDP (base year = 1996) is $125 billion and

the Nominal GDP is $150 billion. Calculate the GDP deflator.3. In an economy, Real GDP for year 2002 (base year = 1996) is

$200 billion and the GDP deflator 2002 (base year = 1996) is 120. Calculate the Nominal GDP for 2002.

4. In an economy, Nominal GDP for year 2005 (base year = 1996) is $60 billion and the GDP deflator 2005 (base year = 1996) is 120. Calculate the Real GDP for 2005.


Calculations--Problem Set1. In an economy, Real GDP (base year = 1996) is $100 billion and

the Nominal GDP is $150 billion. GDP deflator = 150 2. In an economy, Real GDP (base year = 1996) is $125 billion and

the Nominal GDP is $150 billion. GDP deflator = 1203. In an economy, Real GDP for year 2002 (base year = 1996) is

$200 billion and the GDP deflator 2002 (base year = 1996) is 120. Nominal GDP = $240B

4. In an economy, Nominal GDP for year 2005 (base year = 1996) is $60 billion and the GDP deflator 2005 (base year = 1996) is 120. Real GDP = $50B


Work period:Test corrections and HW2-7

motivated monday, october 28 turned-up tuesday, october ......motivated monday, october 28 turned-up...

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