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201c2ol - other countries M = imports(from another country...

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CHAPTER 2 - THE U.S. ECONOMY . WHAT goods and services does the Unites States produce? . HOW is that output produced? . FOR WHOM is the output produced? - GROSS DOMESTIC PRODUCT (GDP)--the market value of all final new goods and services produced IN a country (within the boarders) in a given time period (year); went into effect Jan. of 1992 - GROSS NATIONAL PRODUCT (GNP)--the old way prior to 1992, what is produced BY a country - U.S. tire plant operating in Brazil would be counted in GNP but not in GDP; Mexican hat plant operating in Texas would be counted in GDP but not GNP - GDP PER CAPITA--measure of living standards; best way make international comparisons; an indicator of how much output the average person would get if all output were divided up evenly among the population - GDP = C + I + G + (X - M) C = consumption I = investment (plant, machinery, inventories) G = government purchases/spending X = exports (shipments to
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Unformatted text preview: other countries) M = imports (from another country), X - M =net exports INCOME TRANSFERS--payments to individuals for which no current goods or services are exchanged (social security, welfare, unemployment, veterans benefits, head start program, public housing) PRODUCTIVITY--output per unit of input (labor hour);-labor quality improves with education and skill training;-these investments in "human capital" yield more productivity-World View p. 33 shows education gap of rich vs. poor FACTOR MOBILITY--our agility in reallocating resources from one industry to another EXTERNALITIES--cost or benefit of a market activity borne by a third party; also called "spillovers" About 75% of U.S. output consists of services NOT goods!! Forms of business ownership: 1 – sole proprietorships: ~ 72 % as a #; do ~6% of sales 2 – partnerships: ~8% as a #; have ~13% of sales 3 – corporations: ~20% as a #; do 81% of sales...
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