The purpose of this article is to argue that the distinction between real and nominal interest rates is the most important concept taught in macroeconomics principles courses. The author offers six reasons why the real versus nominal interest-rate concept is worthy of special attention. One of ...
Introduction to MacroeconomicsMacroeconomic Terms and VariablesGross Domestic Product (GDP); Calculating GDP Using the Expenditures Approach and Income ApproachNational Accounts: Gross National Product, Net Domestic Product, National Income, Personal Income, Disposable Income Nominal and Real GDP, GDP Price ...
You can view the transcript for “Real GDP and nominal GDP | GDP: Measuring national income | Macroeconomics | Khan Academy” here (opens in new window).GDP in year one is $1000 and the GDP in year two is $1200. The price for apples in year one was $0.50 per pound, but it rose...
Nominal and real are two terms that are related but have different meanings in different contexts. Nominal and real GDP, nominal and the real rate of return, nominal and real interest rates, and so on are calculated in order to compare the outcomes under each method....
Consider the following two definitions of macroeconomics: 1. Macro is the study of aggregate economic variables, including inflation, real output, unemployment, interest rates and exchange rates. 2. Macro studies the effects of the market for the medium of account, in a world of nominal contracts...
The term premium on nominal long-term bonds in the standard dynamic stochastic general equilibrium (DSGE) model used in macroeconomics is far too small and stable relative to empirical measures obtained from the data - an example of the "bond premium puzzle." However, in models of endowment eco...
Macroeconomics and Volatility: Data, Models, and Estimation One basic feature of aggregate data is the presence of time-varying variance in real and nominal variables. Periods of high volatility are followed by peri... J Fernández-Villaverde,Rubio-Ramírez, Juan Francisco - 《Cepr Discussion Papers...
First, it is not necessarily true in theory. Robert King (1993) showed that, in a forward-looking rational expectations model, easy money can raise both nominal and real interest rates. Second, if real rates are the “right” monetary policy indicator, then monetary policy became extraordinary...
The real GDP is determined in the labor market, and increases in prices result in nominal wages rising in such a way as to leave the employment and real GDP unchanged. The policy described in the ques Which of the following economic varia...
The nominal interest rate and inflation rate are variables in the calculation of the real interest rate. You take the nominal interest rate and subtract the inflation rate to get the real interest rate. What is the exact Fisher equation? The Fisher equation was named after American economist, ...