Monday

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 8 The Data of Macroeconomics
Chapter 24 of 36 Measuring The Cost of Living
Section 12 of 14
…
A year ago Sally Saver made a $1000 deposit in a bank savings account paying 10% interest per year.
At that time a CD at the local music store cost $10.
Her $1,000 was equivalent to the value of 100 music CDs.
Now, a year later, with interest she has $1,100.
How many CDs she now can buy depends on the current CD price.
…
Here are some examples of what could have happened to the CD price over the past year:
Zero inflation
· the price of a CD remains at $10
· the number of CDs she can buy with her $1100 has risen from 100 to 110
· she has had a 10% increase in purchasing power
Six percent inflation
· the price of a CD has risen from $10 to $10.60
· the number of CDs she can buy with her $1100 has risen from 100 to about 104
· she has had a 4% increase in purchasing power
Ten percent inflation
· the price of a CD has risen from $10 to $11
· the number of CDs she can buy with her $1100 stays at 100
· she has had a zero increase in purchasing power
Twelve percent inflation
· the price of a CD has risen from $10 to $11.20
· the number of CDs she can buy with her $1100 has fallen from 100 to about 98
· she has had a 2% decrease in purchasing power
Two percent deflation
· the price of a CD has fallen from $10 to $9.80
· the number of CDs she can buy with her $1100 has risen from 100 to about 112
· she has had a 12% increase in purchasing power
…
To calculate how much a person earns in a savings account, we need to consider both
· the interest rate
· the change in the prices due to inflation or deflation
The interest rate that measures the percent change in actual dollar numbers is called the nominal interest rate.
The interest rate that measures the percent change in dollars corrected for inflation is called the real interest rate.
The equation that shows the relation of nominal interest rate, real interest rate, and inflation is real interest rate = nominal interest rate - inflation rate.
The nominal interest rate shows how fast the number of dollars in a savings account rises over time.
The real interest rate shows how fast the purchasing power of a savings account rises over time.
… …
some examples
ikutsuka no rei
…

Comments

Post a Comment

Popular posts from this blog

HAT Manifesto Part 1/2 - Rubric Cube - 251207 edit

Image
“The world we see that seems so insane is the result of a belief system that is not working. To perceive the world differently, we must be willing to change our belief system, let the past slip away, expand our sense of now, and dissolve the fear in our minds.” - William James “All experience has shown mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.” - Thomas Jefferson “Wherever good fortune enters, envy lays siege and attacks it. And when it departs, sorrow and repentance remain behind.” - Leonardo da Vinci “Struggle is the indispensable accompaniment of progress. If men were entirely social, man would stagnate. A certain alloy of individualism and competition is required to make the human species survive and grow. Without qualities of an unsocial kind men might have led an Arcadian shepherd life in complete harmony, contentment, and mutual love. But in that case all their talents would hav...
Read more
  From article What 10 Years of U.S. Meddling in Ukraine Have Wrought (Spoiler alert: Not democracy). Aaron Mate. April 30, 2024. Section 2. Seeking to capitalize on the unrest in Ukraine in 2013, U.S. figures including State Department official Victoria Nuland, Republican Sen. John McCain, and Democratic Sen. Chris Murphy visited Maidan Square. In a show of support for the movement’s hardline faction, which went beyond supporting the EU trade deal to demand Yanukovych’s ouster, the trio met privately with Tyahnybok and appeared with him on stage. The senators’ mission, Murphy said, was to “bring about a peaceful transition in ukraine.” … The Maidan Movement’s most significant U.S. endorsement came from then-Vice President Joe Biden. “Nothing would have greater impact for securing our interests and the world’s interests in Europe than to see a democratic, prosperous, and independent Ukraine in the region,” Biden said. According to Andrii Telizhenko, a former Ukrainian...
Read more

Scot and Fumiko pictures and information

Image
  Fumiko Scot's information: Weight at 165 pounds, got to 160 pounds five years ago and have recently been bouncing between 163 and 168. Common sense ways to lose and keep off weight are eat right and light and get lots of exercise. Main exercise is walking, do 1~2 miles most days. Over career worked as a salesman in the steelmaking, fasteners, and auto manufacturing industries, lots of travel in U.S., Canada, Mexico, and Japan. Have visited every U.S. city with a major league, MLB, NFL, NBA, NHL, sports team except Sacramento, have gotten as close as Travis Air Force Base. Often traveled on Sundays, much time on the road so could not eat right and get enough exercise so got heavy, up to 200 lbs. Was on commission and made enough to retire early, now eat right and light, and get enough exercise. Now am spending most time reading and writing. Our Wick branch goes back to the brother of owner of the Wick House at Morristown National Historical Park in Morristown New Jersey, and on ba...
Read more