Econ1 Review - Econ1 Review for Final Econ1 Review for...

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Econ1 Review for Final Econ1 Review for Final (2006 Fall ) Note: i. This outline does not include Chapter 23( Output and Expenditure in the Short-Run ), chapter 26, 27 and 28. Please refer to your note in big lectures and other review material. 2. Please also study you textbook and lecture notes to have a good preparation for the final. Four Numbers you should remember: 1. Recent Unemployment Rate in 2006: 4.4% 2. Recent Inflation Rate in 2006: 4.7% 3. Real GDP Growth Rate in 2006: 3.5% 4. Extra Balance : - $838 billion Chapter 19 GDP 1. GDP is the market value of all final goods and services produced in a country during a period of time. NOTE: 1)GDP is market value, household production is not included. 2)GDP includes only final goods, those purchased by final users. Intermediate goods should not be included. 3) Government transfer payments are NOT included in GDP. 4) GDP includes only current production, does not include value of used goods. 2. Y= C+I+G+NX New house purchase of household is investment Salaries for teachers in public schools are included in government purchases. Government transfer payments are NOT. 3. Real GDP = Nominal GDP – Inflation 1
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Econ1 Review for Final 4. Shortcomings in GDP: (1) Not reflect household production and underground economy (2) The value of leisure is not included (3) GDP is not adjusted for pollution and other negative effects of production. (4) Not adjusted for changes in crime and other social problem.
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