Chapter 2 - Macro

Chapter 2 - Macro - C hapter 2 Measuring the state of the...

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Chapter 2 Measuring the state of the economy - Gross domestic product: the key measure of the state of the economy, the market value of the final goods and services produced in an economy over a certain period. Production=Expenditure=Income - The three are to be considered equal - Economic profits are the above-normal returns associated with prices that exceed those that prevail under perfect competition The expenditure approach to GDP - National income identity = Y=C+I+G+NX - Y = GPD, C = consumption, I = investments, G = government purchase, NX = net exports (also called trade balance) - Trade deficit: the rest of the world sneds more goods to the U.S. than we send in return. The only way they agree to this is if we promise to repay the “loan” in the future. The income approach to GDP - Capital refers to the inputs into production other than labor that are not completely used up in the production process. -
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Chapter 2 - Macro - C hapter 2 Measuring the state of the...

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