chap2.10 - 1 Econ. 102. Chapter 2. Data of Macroeconomics:...

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Econ. 102. Chapter 2. Data of Macroeconomics: GDP, CPI and Unemployment 1. Economic activity arises from scarcity, i.e., the available resources are insufficient to meet all wants. Economics studies the choices people make to cope with scarcity. These choices determine the performance of the economy. The performance of the economy can be summarized by (1) the standard of living, (2) cost of living, and (3) business cycle. 2. Three main issues that macroeconomics tries to study and understand are (a) The standard of living : the level of consumption of goods and services that people enjoy on the average. It is measured by RGDP per person (average income per person). (b) The cost of living : the number of dollars it takes to buy the goods and services that achieve a given standard of living. It is measured by CPI, GDP deflator, and inflation rate. (c) business cycle : a periodic but irregular up-and-down movement in output, incomes and unemployment. It is measured by economic growth rate and unemployment rate. 3. Economic data offer systematic and objective information. Various statistics are computed that summarize the state of the economy . Economists use these statistics to study the economy; policymakers use them to monitor changes in the economy and formulate appropriate policies. 4. GDP (gross domestic product) is the market value of all final goods and services within an economy in a given period of time. 5. Final good or service : A good or service that is produced for its final user and not as a component of another good or service. It is not used as an intermediate good or service. Note:
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This note was uploaded on 09/08/2010 for the course ECON 102 at San Jose State University .

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chap2.10 - 1 Econ. 102. Chapter 2. Data of Macroeconomics:...

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