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econ final - Monetary Policy determination of the nations...

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Monetary Policy- determination of the nations money supply (provision of additional cash by gov. to the banking system) Fiscal policy- decisions that determine the governments budget, including the amount and consumption of government expenditures and revenues Structural policy- government policies aimed at changing the underlying structure or institutions of the nations economy Positive analysis- economic consequences of event or policy, not if the consequences are desirable Normative analysis- question of what policy should be used Aggregation- adding up of individual economic variables to obtain economy wide totals GDP- market value of final goods and services produced in a country in a given period Final goods or services- goods or services consumed by the ultimate user, they are end products of production process-they are counted in GDP Intermediate goods or services- goods or services used up in production of final goods and services-counted in GDP Value added- market value of its product/service minus cost of inputs purchased Consumption- spending by households on goods and services like food, clothing, and entertainment (consumption spending=2/3 of GDP) Investment- spending by firms on final goods and services, primarily capital goods and housing Government purchases- by federal, state, local governments of final goods and services-do not include transfer payments or government debt Net exports- exports – imports Real GDP- quantities produced valued at prices in base year, rather than current year, and measures the physical volume of production (NGDP/P*100)
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