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Unformatted text preview: CHAPTER 6 SUMMARY: 1. How do we know how much the economy produces? When you hear about GDP on the news, what does it mean? Aggregate output is the total amount of goods and services produced by an economy. Gross domestic product (GDP) is the principal measure of aggregate output. 2. If you buy a new Dodge Viper, does it count toward this year's GDP? What about a new Porsche Boxster? How about a '57 Chevy? GDP is the value of final goods and services produced within an economy (including the value of the new Dodge Viper). GDP excludes products made abroad and sold in the domestic economy (such as the Porsche Boxter), used goods (such as the '57 Chevy), as well as paper transactions, such as the sales of stocks and bonds. 3. Until fairly recently, the output of the economy was referred to as GNP rather than GDP. How do they differ? Gross national product (GNP) measures the output of goods and services by domestically owned factors of production. For example, the value of a Honda Accord produced at a plant in Tennessee factors of production....
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This note was uploaded on 09/14/2009 for the course ECON 304L taught by Professor Staff during the Fall '07 term at University of Texas at Austin.
- Fall '07
- Gross Domestic Product (GDP)