Makro u2013 Mod 3 u2013 Ch 8.docx - Eco u2013 Mod 3...

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Eco – Mod 3 – Ch 8ECO201—Module 3 TerminologyDirections: Define each of the terms below and evaluate the significance of each term to the topics presented within the textbook.Chapter 8TermDefinitionSignificanceCapital consumption allowanceAllowing for depreciation (NDP) – theamount that businesses would have to save in order to take care of deteriorating machines and other equipmentNDP = GDP - DepreciationConstant dollarsare dollars expressed in terms of real purchasing power.This price-corrected GDP is the real GDPDepreciationDisposable personal income (DPI)Personal income after personal income taxes have been paidDurable consumer goodsItems that last more than 3 yearsAutomobiles and FurnitureExpenditure approach Computing GDP by adding up the dollar value at current market prices of all goodsand servicesFederal, state, and local purchasesNo transfer payments (SSI or VA Benefits)Final goods and servicesIntermediate Goods are omitted by determining value added at each stage of productionFixed investment

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