ECN 302-602 (1), The Macro Goals

ECN 302-602 (1), The Macro Goals - Chapter 1 -The Macro...

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Chapter 1 -- The Macro Goal Variables Measures of Economy’s “Health” Definitions, Realistic Goals, and Recent (US) Performance
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#1 -- Real Gross Domestic Product (Real GDP) Real GDP (Y) -- The total production of final goods and services over a period of time, expressed in constant prices of a base year. Why Real GDP (GDP in constant dollars), instead of Nominal GDP (GDP in current dollars)?
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Real GDP -- Realistic Goal Realistic Goal for Real GDP -- to be as high as possible without accelerating inflation (overstimulated economy). Can state this goal in a more formal way.
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The Natural Level of Real GDP (Potential Real GDP) The Natural Level of Real GDP (Y N ) -- that level of real GDP in which inflation has no tendency to accelerate or decelerate.
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Comparing Real GDP to the Natural Level of Real GDP Y < Y N -- sluggish economy with decelerating inflation (inflation rate ) Y > Y N -- economy with accelerating inflation Y = Y N -- economy with constant inflation rate
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ECN 302-602 (1), The Macro Goals - Chapter 1 -The Macro...

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