Lecture 4 - Measuring the Economy Key Points Circular Flow...

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1 1 Measuring the Economy Key Points Circular Flow NIPA GDP concepts Value Added Real vs. Nominal GDP Deflators Welfare Comparisons Circular flow Antigrowth Macro (episode 20) 2 In the News? 3 Course Issues Gradebook Investment Game Videos - $1 Assignment 4 Thursday Inv Game Room Courses Careers room Hybrid – 2B ugh/ 3b?
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2 4 What is (Nominal) GDP? Expenditures on Newly Produced final goods and services valued at market prices by factors located in U.S. 1. Total flow 1. Stock vs flow 2. newly produced 3. final goods and services 4. valued at market prices 1. Why? 5. Factors located in U.S. 1. Vs GNP 1. Buy $20 of food, $15 snacks, $15 entertainment, $30 soda GDP=$80 spending on final goods and services 5 6 How do we calculate Nominal GDP? 1. Spending by Type of Expenditures C+I+G+X-M 2. Income Generated by Type of Income Comp of Employees + Corp Profits + Rental Income +Interest + Prop. Income 3. How Disposed of C+S+T+Foreign Transfers 4. Sum of Value Added Surveys Note nom GDP = P x Q Up if P or Q or both
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