Economic Flashcards
1
Q
The economic short run
A
period in which a firm’s plant size and technology are fixed.
2
Q
actual real GDP is equal to
A
potential real GDP in the long run.
3
Q
Opportunity cost of production
A
what you are sacrificing / what you are gaining = the opportunity cost
4
Q
Fischer Index
A
(Index L *Index P)^0.5
Index L = P1Q0 / P0Q0
Index P = P1Q1 / P0Q1
5
Q
Real exchange rate
A
Nominal spot exchange rate × CPI of the foreign country / CPI of the domestic country
6
Q
Change in the real exchange rate
A
[(1 + Change in exchange rate) × (1 + Change in price level in foreign country)] / (1 + Change in price level in domestic country) –1
