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One problem in using exchange rate when comparing GDP per capital between countries is that is fluctuates a lot. A way of avoiding dependence on exchange rate is to use purchasing power.
GDP is a flow!
Lastly, note that GDP is a flow variable, not a stock variable. By a flow variable we mean a variable which is measured in something per unit of time. If you fill a bath tub you may fill it at 40 liters per minute - a flow - whereas the tub itself may comprise 200 liters - a stock. Similarly, income is flow (you may make 9 euro per hour) whereas the amount of money you have in your bank account is a stock (you would never claim that you have 2400 euro 'per month' in your account - you have 2400 euro period).
GDP, being a flow, isn't a measure of the total wealth of a country however a measure of the 'income' of the country during a particular period of time. Sure if GDP is high, it is very likely that total wealth of the country is increasing over time (some wealth is lost to depreciation). Consequently there is often a connection between what we perceive as a 'rich' country and a high GDP per capita.
The figure below defines an economy's aggregate demand curve and its short-runand long-run aggregate supply curves (labelled AD, SRAS, and LRAS, respectively). practically,the econ
Expenditure method is also called Flow-of-Expenditure method, consumption and investment method, income Disposal method, etc. Expenditure method measures the final expenditure
HOW CAN A COUNTRY MAINTAIN EQUILIBRIUM GDP IN AFOREIGN TRADE?
Rewrite the national-income model (3.23) in the format of (4.1), with Y as the first vari¬able. Write out the coefficient matrix and the constant vector.
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The hypotheses are: The null hypothesis, infers that a unit root exists, whereas the alternative hypothesis, concludes that there is no root. Decision rule:
Suppose arm's demand curve is given by P = 120? Find the (value of) price elasticity of demand (point elasticity) for the demand curve when the price is $100. Is demand elastic or
with help of is-lm technique explain the process of integration of money market and goods market by way of keynesian approach
what is the relevance of the lewis model
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