004 - Macroeconomic Macroeconomic Fundamentals Fundamentals...

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Unformatted text preview: Macroeconomic Macroeconomic Fundamentals Fundamentals ECO 473 - Money & Banking - Dr. D. Foster ECO 473 - Money & Banking - Dr. D. Foster The Circular Flow The Circular Flow of Income and of Income and Product Product The Gross Domestic Product (GDP) The Gross Domestic Product (GDP) • Defined as: The total value of all final goods and services The total value of all final goods and services produced during a given period. produced during a given period. Evaluated at market prices … sort of. Serves as a measure of an economy’s total output and of the total income generated (to individuals). Limitations of GDP Limitations of GDP • Excludes nonmarket production. Excludes nonmarket production. • Measurement problems. Measurement problems. • Welfare interpretations. Welfare interpretations. • Country differences are difficult. Country differences are difficult. Components of GDP Components of GDP • Consumption Consumption spending: Total household purchases of goods and services. • Investment Investment spending: Purchases of new capital goods (fixed I), and Changes in business inventories. • Government Government spending: State/Local/Federal government expenditures. • Net export Net export spending: Exports - Imports. Calculating Gross Domestic Product Calculating Gross Domestic Product 1990 1995 2000 2005 Consumption Spending 4,770 5,433 6,739 7,803 Investment Spending 886 1,109 1,679 1,831 Government Spending 1,530 1,549 1,721 1,946 Net Export Spending-55-71-379-618 Gross Domestic Product 7,112 8,031 9,817 11,003 Real GDP - Quarterly Growth (Annual Rate)...
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This note was uploaded on 10/22/2010 for the course ECO 473 taught by Professor Foster during the Spring '07 term at N. Arizona.

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004 - Macroeconomic Macroeconomic Fundamentals Fundamentals...

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