CHAPTER 5 - CHAPTER 5 Measuring a nations wealth...

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CHAPTER 5 – Measuring a nations wealth Macroeconomics – the study of economy-wide phenomena including inflation, unemployment, and economic growth Concerns the working of an entire economy. GDP measures the total income of a nation and is the most closely watched stat because it is thought to be the best measure of an economic societies well-being The economies income and expenditure - We use GDP to determine the wealth/ income of a nation - GDP measures income AND total expenditures on the economy’s output of goods and services. - Income must equal expenditures o Seller pays 100 for item, buyer receives 100 therefore expend. And GDP = 100 - Circular-flow diagram (Pg. 99) also explains income = expenditures The measurement of GDP - Gross Domestic Product – is the market value of all final goods and services produced within a country in a given period of time. “GDP is the market value…” - GDP adds together many different products into a measure of the value of economic activity. It uses the market price to add goods such as apples and oranges. If the price of an apple is twice that of an orange apples contribute twice as much as oranges to GDP. “…of all…” - GDP is calculated on all goods the economy produces and sells legally in markets. -
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CHAPTER 5 - CHAPTER 5 Measuring a nations wealth...

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