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chp_7_notes - Ch. 7 GDP: Measuring Total Production and...

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Ch. 7 GDP: Measuring Total Production and Income Definitions Microeconomics is the study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. Macroeconomics is the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth. Business cycle is the alternating periods of economic expansion and economic recession. Expansion is the period of a business cycle during which total production and total employment are increasing. Recession is the period of a business cycle during which total production and total employment are decreasing. Economic growth is the ability of an economy to produce increasing quantities of goods and services. Inflation rate is the percentage increase in the price level from one year to the next. Gross Domestic Product (GDP) Measures Total Production Gross Domestic Product (GDP)     — the market value of all final goods and services  produced in a country during a period of time, typically one year.   o GDP is measured using market values, not quantities. o GDP includes only the market value of final goods. Final Good or Service     — one that is purchased by its final user and is not included in the  production of any other good or service.
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o Intermediate Good     —  a good or service that is an input into another good or  service, such as a tire on a truck. GDP includes only current production. o A Table is a final good; wood is an intermediate good. GDP and Income
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This note was uploaded on 02/25/2010 for the course ECON 2010 taught by Professor Roussel during the Spring '08 term at LSU.

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chp_7_notes - Ch. 7 GDP: Measuring Total Production and...

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