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

Notes Information

Material Type:Class Note
Class:ECON 2005 - Principles of Economics
University:Virginia Polytechnic Institute And State University
Term:Fall 2008
  • The Economy
  • Different Points
  • Law of Increasing Opportunity Cost
  • Multiple Number
  • Goods and Services
  • Income Approach
  • Horizontally
  • Production Goods
  • Employment-at-Will
  • Employment at Will
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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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