Principles of Economics- Mankiw (5th) 483

Principles of Economics- Mankiw (5th) 483 - CHAPTER 22 M E...

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CHAPTER 22 MEASURING A NATION’S INCOME 499 condition of the economy, economists and policymakers often want to look beyond these regular seasonal changes. Therefore, government statisticians adjust the quarterly data to take out the seasonal cycle. The GDP data reported in the news are always seasonally adjusted. Now let’s repeat the definition 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. It should be apparent that GDP is a sophisticated measure of the value of economic activity. In advanced courses in macroeconomics, you will learn more of the sub- tleties that arise in its calculation. But even now you can see that each phrase in this definition is packed with meaning. QUICK QUIZ: Which contributes more to GDP—the production of a pound of hamburger or the production of a pound of caviar? Why? THE COMPONENTS OF GDP Spending in the economy takes many forms. At any moment, the Smith family
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