# Lecture Notes for ECON 2005 - Principles of Economics at Virginia Tech (VT)

## Notes Information

 Material Type: Class Note Professor: Staff Class: ECON 2005 - Principles of Economics Subject: Economics University: Virginia Polytechnic Institute And State University Term: Fall 2008 Keywords: The EconomyDifferent PointsLaw of Increasing Opportunity CostMultiple NumberGoods and ServicesIncome ApproachHorizontallyProduction GoodsEmployment-at-WillEmployment at Will

## Sample Document Text

1.Rule of 70: Used to determine how many years it takes for a value to double, given a  particular annual growth rate. For example, if you put \$20,000 in the bank and it earns  yearly interest of 7%, then it will take 10 years (70/7) for your income to double. 70/x = #  years to double where x equals growth rate. 2.Y = C + I + G + NX – the spending approach to calculating GDP. 3.S = I in a closed economy (no trade) and S = I + NX in an open economy 4.Calculating Nominal GDP: Multiple the number of each good produced times the price  of each good: Photdog*Qhotdog + Phamburger*Qhamburger. 5.Calculating Real GDP: this proceeds just as calculating nominal GDP, but instead of  current prices you use base prices: Photdog(base year)*Qhotdog(current year) +  Phamburger (base year)*Qhamburger (current year). Side implications: In the base year  Nominal GDP = Real GDP, ...

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