CH7 - 200996 Short run fluctuations (Business cycle)...

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2009 9 6 1 GDP: Measuring Total Production and Income 1 ` Short run fluctuations (Business cycle) Alternating periods of economic expansion and economic recession. ` Economic growth The ability of an economy to produce increasing quantities of goods and services. ` Some important “gauges” of macro performance include: Employment Labor force participation rate; Inflation rate The percentage increase in the price level from one year to the next. 2 Goal: To summarize the total production of an entire economy into a single number One very important (may be most important) Learning Objective 7.1 concept: Gross domestic product ( GDP ) Definition: “GDP is the market value of all final goods and services produced within an economy in a given period of time.” 3 Learning Objective 7.1 Data USA: Bureau of Economic Analysis (BEA), Department of Commerce http://www.bea.gov/ Measuring Total Production: Gross Domestic Product (http://www.bea.gov/national/xls/gdplev.xls) HK: Census & Statistics Department http://www.censtatd.gov.hk/home/index.jsp (http://www.censtatd.gov.hk/FileManager/EN/Conten t_802/nat_account.pdf) releases the information every quarter 4 Learning Objective 7.1 Hong Kong nominal GDP (2007): HK$1,612.6 billions GDP per capita: HK$ 232,836 (US$29,851) USA nominal GDP (2007): US$13,807.5 billions population (est.): 301,290,332 ( US Census Bureau) GDP per capita: US$ 45,828 nominal GDP: measured at current prices 5 ` “GDP is the Market Value ` “…final goods and services…” Final good or service A good or service purchased by Learning Objective 7.1 a final user. Intermediate good or service A good or service that is an input into another good or service. We do not count intermediate goods. Why? 6
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2009 9 6 2 ` “…in a given period of time” GDP includes only production that takes place during the indicated time period. Learning Objective 7.1 Example: If you bought a Mini Cooper on October 2004, the purchase (say, at $300,000) was included in GDP of 2004. If you sold it on March 2009, was the transaction included in GDP of 2009. Why?
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CH7 - 200996 Short run fluctuations (Business cycle)...

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