CH 10 Measuring a Nation's Income

CH 10 Measuring a Nation's Income - Standard of living has...

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Standard of living has increased from 1900 to 2010 - how do we know/measure this? Misery Index w/Jimmy Carter & Ronald Reagan Are we falling into or recovering from a recession? Gross Domestic Product (GDP) Market value of all final goods & services produced within a country in a given period of time Calculate the GDP - cooperative handout Avoid double counting Avoid counting transactions that do not involve legal goods or services Market price reflects relative importance of good (ex. Toothpicks and cars) What makes up GDP? Look back to circular flow model GDP are goods & services produced by firms made available in market Who buys goods & services? Households GDP= total spending on goods & services by households (Consumption) GDP = Consumption Who else? Firms (Investment) Investment is not stocks and bonds - it’s when firms buy goods & services GDP = Investment + Consumption Who ELSE? Government & Foreign Sector Foreign Sector- we export but also import So,
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