Chapter 27

I would give this chapter a 1.5 out of 3. There wasn't a huge amount of material to digest which normally makes it easier. We learned the basics of how to calculate the value of money today versus how much it would be worth at a certain interest rate in the future. We also saw an overview of the stock market and their prices. We generally saw that it's almost impossible to do significantly better than the market is doing as a whole according to the efficient t market hypothesis. Stock prices are affected by the perceived value of the public and as it is difficult to predict how that viewing may change it's difficult to predict stock prices. We also learned about risk in the chapter and how humans are normally risk averse and in investing we generally diversify our portfolios.

Chapter 26

I would give this chapter a 2.5 out of 3 because of the vast amount of terms and vocabulary in it. While I have heard some of the terms before it will be important to keep them all straight. On the most basic level there are the savers and the borrowers which allows the economy to grow substantially by paring the two types together. Borrowers can raise money through either the financial market or financial intermediaries. In the market stock can be sold for part ownership in a company and bonds can be sold purely for the saver to collect interest on. Banks and mutual funds serve as a middle ground for savers to lend out their money. Banks pay interest to the savers and then charge more interest on borrowers. Mutual funds buy a collection of stocks for a saver. Generally the higher the risk savers are willing to undertake the greater the payout they can receive.

Chapter 24

I would give this chapter a two out of three for difficulty because while it was simple to see some of the uses and shortcomings of the consumer price index, I will need practice with the calculation portion of it. I also can see the difference between the GDP deflator and the CPI. The CPI measures everything that consumers spend their money on while the GDP deflator measures the prices of good produced domestically. That's why in the case of the consumer the CPI is going to be a better general measure of the costs for different standards of living. Other than looking at the cost of living now we can use the CPI to compare it to the costs of living in previous years by accounting for inflation. CPI is very important to try and calculate correctly when using indexation.

Chapter 23

I would give this chapter a 1.5 out of 3 because while the majority of the content was easy to understand, I had a bit of trouble keeping track of all the different types of ways to measure GDP. Understanding what the GDP is was relatively simple. Of course there are many caveats and little things that it's important to remember about what the GDP does and doesn't measure. For instance selling a used car doesn't contribute to a nations GDP because it has already been purchased once and produced once. Welfare would be another example of something not used in measuring a country's GDP because the welfare isn't being exchanged for a good or service, unlike paying the salary of a government employee. The big idea about GDP is that it's a relatively good way to measure a countries prosperity and quality of life most of the time.