Economics for Business II Day 11 – Some values (numbers) Dr. Andrew L. H. Parkes “A...

Economics for Business Economics for Business IIII

Day 11 – Some values (numbers)Day 11 – Some values (numbers)

Dr. Andrew L. H. ParkesDr. Andrew L. H. Parkes““A Macroeconomic Understanding for use in A Macroeconomic Understanding for use in

Business”Business”

卜安吉卜安吉

April 28, 2013April 28, 2013 BECO II, Day 11BECO II, Day 11 22

Growth in PricesGrowth in Prices Inflation – 6.2% over the Inflation – 6.2% over the

past year to Aug.past year to Aug. What is the effect on What is the effect on

wages? wages? In the U.S., the In the U.S., the

minimum wage rate is minimum wage rate is $7.25, what was the $7.25, what was the real wage during the real wage during the past year at 6.2% past year at 6.2% inflation?inflation?, http://www.bloomberg.com/news/2011-09-11/china-strength-defies-hard-landing-scenario.html

OLD NUMBERS –

What are today’s?


CPI and GDP deflator CPI and GDP deflator HistoricallyHistorically


Industrial ProductionIndustrial Production A monthly measure of the A monthly measure of the

economic growth goaleconomic growth goal– Increased at 13.5% rate Increased at 13.5% rate

last month was 14% y-o-ylast month was 14% y-o-y

OLD NUMBERS! From FALL – today’s????OLD NUMBERS! From FALL – today’s????

Expectations are for Expectations are for economic growth at about economic growth at about 8.4% (down from the first 8.4% (down from the first half growth of 9.6%)half growth of 9.6%)

, http://www.bloomberg.com/news/2011-09-11/china-strength-defies-hard-landing-scenario.html

http://www.bloomberg.com/news/2011-09-09/china-s-stock-futures-rise-amid-obama-jobs-plan-easing-inflation-outlook.html


Interest RatesInterest Rates

One year lending rate One year lending rate is 6.56%is 6.56%

One year deposit rate One year deposit rate is 3.5%is 3.5%

The reserve The reserve requirement is requirement is 21.0% 21.0% for the largest for the largest banksbanks

, http://www.bloomberg.com/news/2011-09-11/china-strength-defies-hard-landing-scenario.html


Yuan trades at what rate Yuan trades at what rate today?today?

See BB (Blackboard.com) for See BB (Blackboard.com) for articles we discuss!articles we discuss!

Three Goals of any Three Goals of any MACROECONOMYMACROECONOMY

– Full Employment – Unemployment RateFull Employment – Unemployment Rate

– Economic Growth – REAL GDPEconomic Growth – REAL GDP

– Price Stability - CPIPrice Stability - CPI

– KNOW what real GDP and CPI meanKNOW what real GDP and CPI mean

– On the Final ExamOn the Final Exam


U. S. Real GDP 2005 - 2009U. S. Real GDP 2005 - 2009

http://www.bea.gov/newsreleases/national/gdp/gdp_glance.htm


U. S. Real GDP 2005 - 2009U. S. Real GDP 2005 - 2009

http://www.bea.gov/newsreleases/national/gdp/gdp_glance.htm


Personal Income & SpendingPersonal Income & Spending

http://www.bea.gov/newsreleases/national/pi/pi_glance.htm


Consumer Price Index 1999 - Consumer Price Index 1999 - 20092009


Oil Prices 1990 to 2010Oil Prices 1990 to 2010


Oil Prices during year 4/10 -Oil Prices during year 4/10 -1111

http://www.bbc.co.uk/news/business/market_data/commodities/143908/twelve_month.stm


Oil Prices during year 4/10 -Oil Prices during year 4/10 -1111

http://www.bbc.co.uk/news/business/market_data/commodities/143908/twelve_month.stm


Trade Balance in the U.S.Trade Balance in the U.S.

http://www.bea.gov/newsreleases/international/transactions/trans_glance.htm


Trade SurplusTrade Surplus

Also recently announced were the higher Also recently announced were the higher than expected Chinese import and than expected Chinese import and export numbers for August.export numbers for August.

However, the trade surplus was $17.76 However, the trade surplus was $17.76 billion, lower than expected!billion, lower than expected!

The median forecast was for $24.6 billion The median forecast was for $24.6 billion after a gap of $31.5 billion in July!after a gap of $31.5 billion in July!

http://www.bloomberg.com/news/2011-09-10/china-s-trade-surplus-in-august-reaches-17-76-billion-exports-rise-24-5-.html


Chapter 23Chapter 23

Pay attention to the Pay attention to the definition of the CPI definition of the CPI in class! – in class! – “Urban Market “Urban Market Basket”Basket”

What is the CPI in What is the CPI in U.S.? In China? -U.S.? In China? - AssignmentAssignment

The Cost of Living is The Cost of Living is measured by the CPImeasured by the CPI

U.S. Department of LaborBureau of Labor Statistics

http://www.bls.gov/cpi/


Cost of Living AdjustmentCost of Living Adjustment

1.1. Substitution BiasSubstitution Bias

2.2. Introduction of new Introduction of new goodsgoods

3.3. Unmeasured quality Unmeasured quality changeschanges

4.4. Typical Average FamilyTypical Average Family

Four problems with using the CPI for a Perfect measure of a COLA


Developed Countries UnemploymentDeveloped Countries Unemployment


Geographic Distribution of Geographic Distribution of Unemployment,Unemployment,

July 2009July 2009


Problem Set 6: Inflation Problem Set 6: Inflation BasicsBasics

CPI and CPI and GDP GDP deflatordeflator

Some Some basic basic ideas and ideas and conceptsconcepts

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Economics for Business II Day 11 – Some values (numbers) Dr. Andrew L. H. Parkes “A...

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