CHAPTER 9 APPLICATIONS INTERNATIONAL TRADE

Nominal GDP = values the production of goods and

services at current price (inflation)
Consumer surplus + Producer Surplus = Total benefit of
Nominal GDP year 1 = ( P1 × Q )
buyers and sellers
Nominal GDP year 2 = ( P2 × Q )
If a country has comparative advantage, that country
will be exporter Real GDP = values the production of goods and
services at constant price (production)
If world price above domestic price, will be export
because quantity supplied higher than quantity demand Nominal GDP year 1 & 2 = ( P1 × Q )
and sellers are better-off, buyers are worse-off
GDP deflator = melihat peranan harga terhadap GDP
Tarrif is a tax for the import goods. With tarrif, prices
rise and governments are better-off 𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝐺𝐷𝑃
GDP deflator = 𝑅𝑒𝑎𝑙 𝐺𝐷𝑃
× 100
Quota is a limit on the quantity of the import goods.
GDP per person = income and expenditure of the
With tarrif, prices rise and license holders are better-off
average person in the economy
Benefit from international trade :
Inflation rate year 2 =
𝐺𝐷𝑃 𝑑𝑒𝑓𝑙𝑎𝑡𝑜𝑟 𝑦𝑒𝑎𝑟 2 − 𝐺𝐷𝑃 𝑑𝑒𝑓𝑙𝑎𝑡𝑜𝑟 𝑦𝑒𝑎𝑟 1
 Increased variety of goods 𝐺𝐷𝑃 𝑑𝑒𝑓𝑙𝑎𝑡𝑜𝑟 𝑦𝑒𝑎𝑟 1
× 100
 Lower costs through economies of scale
 Increased competition CHAPTER 24 MEASURING THE COST OF LIVING
 Enhanced flow of ideas
Consumer price index (CPI) = a measure of the overall
CHAPTER 23 MEASURING A NATION’S INCOME cost of the goods and services bought by a typical
consumer.
𝐶𝑜𝑠𝑡 𝑜𝑓 𝑙𝑖𝑣𝑖𝑛𝑔 𝑦𝑒𝑎𝑟 1,2,3
CPI = × 100
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑙𝑖𝑣𝑖𝑛𝑔 𝑦𝑒𝑎𝑟 1

Inflation = keadaan/situation

Inflation rate year 2 =

𝐶𝑃𝐼 𝑦𝑒𝑎𝑟 2 − 𝐶𝑃𝐼 𝑦𝑒𝑎𝑟 1
𝐶𝑃𝐼 𝑦𝑒𝑎𝑟 1
× 100 = ... %

Inflation rate year 1 = no data available

GDP deflator reflects the prices of all goods and

services produced domestically

CPI reflects the prices of all goods and services bought

by consumers
GDP is the market value of all final goods and services
produced within a country in a given period of time. Problem measuring cost of living :
GDP = Consumption + Investment + Government  Substitution bias
Purchases + Net Exports  Introduction of new goods
Consumptions = durable goods (automobiles,  Unmeasured quality change
appliances), nondurable goods (goods, clothing),
Nominal interest = without a correction for the effects
services (haircuts, medical care, education)
of inflation
Investment = new housing, capital, equipment,
Real interest = corrected for the effects of inflation
inventories, structures (used to produce other goods and
get gain or increase the capital) Real interest rate = Nominal interest rate – inflation rate

Government purchases = salaries of PNS, except

transfer payments

Net exports = export – import