Class Notes - 9-24-07

Class Notes - 9-24-07 - Macroeconomics Class Notes -9-24-07...

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Macroeconomics – Class Notes -9-24-07 COMPONENTS OF GDP GPD ( Y ) is sum of: o Consumption ( C ) o Investment ( I ) o Government Purchases ( G ) o Net Exports ( NX ) o Y (income paid out to households) = C + I + G + NX (GDP in terms of expenditures – goods and services) Consumption (C) : o Is spending by households on goods and services Ex. Buying clothing, food, movie tickets. o Consumer durable – last longer than a year Includes everything except a house. New home would NOT be part of durable – would be an investment o Consumer non-durable – consumed within a year Food, clothing, services Investment (I): o Is purchases of capital equipment and structures Factory, houses, drills, etc. Recessions usually occurs because selling rate begins to fall for non- durable – inventory tends to grow higher and higher – cut back on production Investments account for (2/3)’s in drop of GDP (usually because of inventory) Government Purchases (G):
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Class Notes - 9-24-07 - Macroeconomics Class Notes -9-24-07...

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