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Jan. 23 - Jan 23 Policy Goals 1 Economic Growth Changes in...

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Jan. 23 Policy Goals 1. Economic Growth Changes in economic growth can have large impacts on output over time. See Problem 1 and 3 at the end of Ch.4. 2. Full employment Unemployment is costly so achieving full employment is a desirable goal 3. A stable average price level Inflation does not lower aggregate real income. But does redistribute income frequently in unpredictable ways Inflation makes it difficult for economic agents (firms, and household) to plan for the future Ch.5: production, Income and employment Measuring Aggregate Output Gross Domestic Output (GDP) - A nation’s gross domestic product (GDP) is the total value of all final goods and services produced for the marketplace during a given period within the nation’s borders Note the following 1. By focusing on final goods double counting is avoided 2. In genera only goods and services produced for the marketplace count in any period’s GDP. Home production of goods and services, for example, does not count 3.
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