by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How to Convert Nominal to Real GDP?To convert nominal to real GDP, we generally use some form of index number. This puts the current value into real terms – meaning that it subtracts out inflation that has raised the costs of items calculated as part of GDP....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Problem of Double Counting GDP?We define GDP as the current value of all final goods and services produced in a nation in a year. Final goods are goods at the furthest stage of production at the end of a year. Statisticians who calculate GDP must avoid the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are the Tools for Macroeconomic Policy?National governments have two tools for influencing the macroeconomy. The first is monetary policy, which involves managing the money supply and interest rates. The second is fiscal policy, which involves changes in...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Macroeconomic Frameworks?As you learn in the micro part of this book, principal tools that economists use are theories and models (see Welcome to Economics! for more on this). In microeconomics, we used the theories of supply and demand. In macroeconomics, we...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Tradeoff between Incentives and Income Equality?Government policies to reduce poverty or to encourage economic equality, if carried to extremes, can injure incentives for economic output. The poverty trap, for example, defines a situation where...
