ec-28 - by factors of production located within a nations...

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Chapter 8 Class I. Chapter Outline a. The economy’s model: circular flow b. National income accounting c. Gross domestic product d. Two main methods of measuring GDP e. Other components of National Income Accounting f. Economic growth: adjusting GDP g. Comparing GDP throughout the world II. National Income Accounting a. A measurement system used to estimate national income and its components III. The Economy’s Circular Flow a. Two observations i. In every economic exchange, the seller receives exactly the same amount that the buyer spends ii. Goods and services flow in one direction and money payments flow in the other IV. Gross Domestic Product (GDP) a. Definition i. The total market value of all final goods and services produced
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Unformatted text preview: by factors of production located within a nations borders b. Observations i. GDP measures the dollar (nominal) value of final output ii. Adjustments (prices and population) will be made later c. Not included in GDP i. Financial transactions ii. Transfer payments iii. Secondhand goods iv. Household production v. Legal underground transactions vi. Illegal underground transactions d. Limitations i. Excludes non-market production ii. Different countries have different legal versus illegal activities iii. Quality of life is not measured iv. GDP poorly measures a nations-well being...
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ec-28 - by factors of production located within a nations...

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