Principles of Economics- Mankiw (5th) 480

Principles of Economics- Mankiw (5th) 480 - 496 PA R T E I...

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496 PART EIGHT THE DATA OF MACROECONOMICS goods and services produced in the economy. Some goods and services are bought by governments, and some are bought by firms that plan to use them in the future to produce their own output. Yet, regardless of whether a household, government, or firm buys a good or service, the transaction has a buyer and seller. Thus, for the economy as a whole, expenditure and income are always the same. QUICK QUIZ: What two things does gross domestic product measure? How can it measure two things at once? THE MEASUREMENT OF GROSS DOMESTIC PRODUCT Now that we have discussed the meaning of gross domestic product in general terms, let’s be more precise about how this statistic is measured. Here is a defini- tion of GDP: ± Gross domestic product (GDP) is the market value of all final goods and services produced within a country in a given period of time. This definition might seem simple enough. But, in fact, many subtle issues arise when computing an economy’s GDP. Let’s therefore consider each phrase in this
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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