Macroeconomics Notes 3-20-08

Macroeconomics Notes 3-20-08 - Macroeconomics Notes 3/20/08...

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Macroeconomics Notes 3/20/08 - Fed funds rate changed to 2.5% o Attempt to boost aggregate demand, stimulate production, and pull the economy out of a recession o Represents another federal step to boost the economy after the mortgage crisis - The airline industry is also in crisis due to rising fuel prices (gas prices have risen by almost 80%) and has been cutting corners o Southwest Airlines didn’t get proper FAA certification on their planes and were flying planes that were unsafe GNP/GDP - GNP is everything produced by Americans at home and abroad - GDP is everything produced domestically, including foreigners living in the US, and excludes what is produced by nationals abroad - Adjustments to GDP 1. Foreign versus national 2. Indirect (sales) taxes and subsidies Example: gasoline is $3.45 a gallon plus $1.20 gas tax Oil companies receive the full $3.45 and pay the gas tax to the government; gas tax not paid to the factors of production GDP at factor costs = GDP at market prices – all indirect taxes and
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This note was uploaded on 04/12/2008 for the course ECON 100 taught by Professor Park during the Spring '07 term at American.

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Macroeconomics Notes 3-20-08 - Macroeconomics Notes 3/20/08...

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