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96 Cards in this Set

  • Front
  • Back
What is the CPI?
a measure of the overall cost of the goods and services bought by a consumer.
Race as Social Construction
- No Biological Aspect
-Race changes depending on where you are.
Who reports the CPI?
The Bureau of Labor Statistics
-Socially constructed
-Based on real/perceived common culture, history, and/or lineages
-Self defined
-Biggest ethnicity marker is language
How often is the CPI reported?
What is the CPI used to monitor?
changes in the cost of living over time
Social narratives Approach
-Uses qualitative data: approaches focusing on specific case studies

-Focuses on lived experuiences of racial/ethnic groups and how they View, Utilize, Experience, and Shape space in unique ways.
Steps of calculating CPI?
1. Fix the Basket
2. Find the Prices
3. Compute Basket Cost
4. Choose a Base Year and Compute Index
5. Computer Inflation rate
What is "Fixing the Basket"?
determine what prices are most important
How does the BLS Fix the Basket?
1. Identifies market basket of goods that everyone buys
2. Conduct monthly consumer surverys
Racial System Under Apartheid
-Started in 1948
-People were racialized into 4 categories
>Black Africans
-"The power to define is critical": since the whites controlled the government, they could create definitions of what is right or wrong
How do we Find the Prices?
Find prices of each good/service in the basket for each point in time
Scales of Segregation under Apartheid
1. National Scale
2. Urban Scale
3. Interpersonal Scale
4. Petty Apartheid
How do we Computer the Basket's Cost?
Use the data on prices to calculate cost of basket at different times.
(Scales of Segregation)

National Scale
-Across entire country
-(Fake) Homelands given to Black Africans, outside the city
How do we Compute the Index?
Divide price of basket in one year by the price in the base year, multiply by 100
(Scales of Segregation)

Urban Scale
-Scale across the city
> Townships: segregated residential zones for non-whites
ex Cape Flats outside Cape Town
How do we calculator inflation rate?
((CPI year 2 - CPI year 1) / (CPI year 1) ) X 100
Petty Apartheid
People's everyday geographies were defined by their racial identities, sanctioned by the state
- The word petty makes it seem like not a big deal
- Seen through segregated public facilities
Calculate the Inflation Rate:
-Base year 2002
-Basket in 2002 is 1200
-Basket in 2004 is 1,236


Knowing One's place apartheid
Two "places"
Biggest basket?
Changing Geography of Immigration in the U.S.
Initially, immigrants were centered around urban Ethnic Enclaves, especially New York and LA

With time, these immigrants began moving outward to suburban areas
Three biggest baskets?
Housing, Transportation, Food
Spacial Assimilation Model
-Immigrants traditionally clustered and formed distinct neighborhoods in urban areas called Ethnic Enclaves (Chinatown, Little Italy)
-*social capital* - Knowing people with common language
-Post 1965: Immigrants more likely to cluster voluntarily
3 problems with CPI?
-Subsitution bias
-Intro of new goods
-Unmeasured quality changes
Critiques of Spatial Assimilation
- Recent immigration faced different receiving societies than Europeans did in the US (politically, social, and demographcially)
-Recent immigrants exhibit distinct residential patterns
What is Substitution Bias? (the problem with CPI)
The basket does not change to reflect consumer reaction to relative prices
Under Substitution Bias, 2 reason whythe basket doesnt change to reflect consumer reactions to prices?
-New Products result in variety, making each dollar more valluable
-Consumers need fewer dollars to maintain standard of living
What are Unmeasured Quality Changes?
The BLS tries to adjust price for constant quality, but this is hard:
-If the quality of a good rises, the value of the dollar rices
-vice versa
The CPI overstates the true cost of living by __
Overstates it by 1% point per year
GDP deflator equation?
Nominal GDP / Real GDP times 100
What is the producer price index?
measures the cost of a basket of goods and services bought by FIRMS
Economists monitor what to gauge how quickly prices are rising?
GDP deflator and the CPI
Different between GDP deflator and CPI?
GDP deflator reflects prices of all goods produced domestically.CPI reflects all prices bought by consumers


CPI compares price of a fixed basket, GDP deflator compares current produced goods prices
The movement of the GDP deflator and CPI rate is...
generally the same
Indexing for inflation means ___
some dollar amount is automatically correct for inflation by law
Equation for indexing for inflation?
Amount in today's dollars =

(Amount in ___ )(price level today/price level in ___ )
What is the nominal interest rate?
The interest rate reported and not corrected for inflation
What interest rates do banks pay?
nominal interest rate
What is the real interest rate?
nominal interest rate correct for inflation
Calculate real interest rate
Nominal interest rate - Inflation
The Nominal Interest Rate and Real Interest Rate move ___
not always together
What is GDP?
Measure of income and expenditures of an economy.
Income must equal ____
Why must income equal expenditure?
Every transaction has a buyer and a seller
What is NOT in the GDP?
1. Things made at home
2. Illegal stuff
How do you calculate GDP?
Consumption + Investment + Government Purchases + Net Exports
What is Consumption?
Spending on goods by households
What is Investment?
Spending on capital stuff, including houses
What is Net Exports?
Exports minus imports
Which part of the GDP is the largest?
What is Nominal GDP?
values production of goods at current prices
What is Real GDP?
values production of goods and services at constant prices
An accurate view of the economy requires adjusting which things?
Nominal AND Real GDP
Best measure of economic well-being of a society?
Higher per-capita GDP indicates what?
higher standard of living
A country's standard of living depends on what?
The ability to produce goods
How much does the US GDP grow annually?
Standard of living is determined by what?
How can one measure productivity and standard of living?
Real GDP per capita
What are the Factors of Production?
Physical capital
Human Capital
Natural resources
What directly determine productivity?
Factors of production
What is Physical Capital?
Input in production
What is Human Capital?
Knowledge and skills acquired through training
What are Natural Resources?
Inputs used provided by nature
What is Technological Knowledge?
Society's understanding of efficient ways to produce things
As the stock of capital rises, extra ouput produced from an addition unit ___
What is the effect referring to countries that start off poor tending to grow more rapidly than those starting rich
catch-up effect
Two kinds of Foreign Investment?
What is Foreign Direct Investment?
Capital investment owned by foreign entity
What is Foreign Portfolio?
Investments financed with foreign money but operated domestically
How can population growth interact with factors of production?
1. Stretches natural resources
2. Diluting capital stock
3. Promoting tech progress
What is the financial system made of?
financial institutions that coordinate actions of savers/borrowers
What are the two components of financial serve industries?
Financial markets
Financial intermediaries
What are Financial markets?
institutions through which savers provide DIRECT funds
What are Financial Intermediaries?
instituions through which savers indirectly provide funds to borrowers
Examples of financial markets?
Examples of Financial Intermediaires?
Banking firms
Mutual Funds
Insurance Firms
What is the sale of stock to raise money called?
equity financing
What is a securities firm?
a group selling stocks or bonds
What is a mutual fund firm?
sells shares to public then uses money to buy diversified portfolio
What is private saving?
among income households have after paying taxes
what is public saving?
amount revenue that goverment has after paying its spending
Tax incentives increases do what? (graph)
Shifts the demand curve to the right
What is crowding out?
increased borrowing and reduction in invesment
What will the effect of a deficit be?
interest rates rise

invesments fall
What is Cyclical Unemployment?
year-to-year fluctuations in unemployment around natural rate
What 3 categories does the BLS put people into?
Not in Labor Force
If you are waiting for the start date of a new job, you are ___
Who is in the Labor Force?
Employed AND the Unemployed.
How is the unemployment rate calculated?
Unemployed divided by Labor Force

Times 100
What is the Labor Force Participation Rate?
Labor Force divided by Adult Population

times 100
Most observed unemployment at a GIVE TIME is what kind of unemployment?
Long term
What is Frictional Unemployment?
unemployment from the time it takes to match workers with jobs
What is structual unemployment?
not enough spots for a job