ECON Notes 3-24 and 3-26

ECON Notes 3-24 and 3-26 - 1) Question: how is size of...

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1) Question: how is size of economy the GDP-determined and what makes it rise and fall over time? I. -This is the basic question of macroeconomics 2) Demand= desire +ability to buy 3) Businesses will not produce if they cannot sell- a business would go bankrupt if it produced but had no customers- II. -So there must be demand for businesses to produce 4) 4 demand fluctuates up and down over time 5) 5 answer to the question: GDP is determined by demand GDP 6) 6 Economic Growth= Increasing Real GDP III. -Recession= Falling Real GDP 1) Link to unemployment: companies need for workers depends on their sales which depend on spending= demand Unemployment results when the Real GDP is not big enough to create jobs so unemployment is the result of the not enough spending in the economy -Remember that GDP=C=I=G=(X-M) -spending comes from 4 sources 1 consumer spending 2 Investment spending 3 Government purchases
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4 International trade 8 so why does the Demand fluctuate 9 first consider consumption C (1) aprox = 2/3of a GDP’
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ECON Notes 3-24 and 3-26 - 1) Question: how is size of...

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