1-13-2011 - 1/11/2011 Measuring Output: Gross Domestic...

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1/11/2011 1 Measuring Output: Gross Domestic Product We aggregate output into Gross Domestic Product, and measure its components. Lecture 2, Thursday, January 13 Big World: The scale of economic activity is enormous Millions of companies, billions of consumers and employees, thousands of governments To make government and business policy decisions, we must understand it as a whole Small Brains: How to understand it all? Humans can comprehend only so much detail GDP A summing up and averaging out of all economic activity. Gross Domestic Product Product because it measures what is produced Domestic because it measures what happens within a nation’s borders Gross because it does not “net out” or subtract depreciation of equipment and structures Gross Domestic Product The value of all final goods and services produced in a year
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1/11/2011 2 Value Can’t add egg rolls and diamond rings, can add their dollar values Egg Rolls Rings 2010 Output 500 2 2010 Price $1 $1,000
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This note was uploaded on 04/25/2011 for the course AGEC 217 taught by Professor Deboer during the Spring '08 term at Purdue University-West Lafayette.

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1-13-2011 - 1/11/2011 Measuring Output: Gross Domestic...

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