Chapter%207%20PPT%20Student%20(2%20slides%20per%20page)[1]

Chapter%207%20PPT%20Student%20(2%20slides%20per%20page)[1]...

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Unformatted text preview: 1 Chapter 7 GDP: Measuring Total GDP: Measuring Total Production and Income Its time for Macro economics! Over the business cycle, the economy grows and contracts Some important gauges of macro performance include: 2 Measuring gross domestic product (GDP) (production of output) Goal: To summarize the total production of an entire economy into a single number we call the: Definition: GDP is the market value of all final goods and services produced within an economy in a given period of time. GDP is the Market Value of all final goods and services We do not count intermediate goods. Why? Example: Ford purchases $1000 worth of Goodyear tires and puts them on a new $20,000 truck. We count only the If we counted the tires and the truck we would get $21 000 for If we counted the tires and the truck we would get $21,000 for GDP. Whats wrong with this calculation? 3 produced includes all current production produced in 08, sells in 09? used goods? within an economy where production occurs what matters who produces? where consumption occurs? in a given period of time Usually per year (reported quarterly) Data are seasonally adjusted The Components of GDP Personal Consumption Expenditures, or Consumption Durable and non-durable goods Services Gross Private Domestic Investment, or Investment Business Fixed Investment Residential Investment Changes in Business Inventories Government Consumption and Gross Investment, or Government Purchases...
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This note was uploaded on 11/15/2010 for the course ECON 203 taught by Professor Nelson during the Fall '08 term at Texas A&M.

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Chapter%207%20PPT%20Student%20(2%20slides%20per%20page)[1]...

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