GDP is defined as the total market value of all expenditures made on consumption

GDP is defined as the total market value of all expenditures made on consumption

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GDP is defined as the total market value of all expenditures made on consumption, investment,  government, and net exports in one year. If one subtracts depreciation and indirect business taxes  from these expenditures, one arrives at  national income , which is the sum of all wage, profit, rent,  and interest incomes earned in the same year.  Growth rate of GDP . The value of GDP by itself is not very interesting. What is interesting is the  annual  growth rate , or year-to-year percentage change, in the value of GDP. To calculate the  percentage change in a statistic, such as GDP, one needs to know the value of the statistic at 
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Unformatted text preview: two dates in time. Suppose that the value of GDP last year was Y L and the value of GDP in the current year is Y C . Then, the percentage change, or growth rate, of GDP is given by This formula is valid for calculating the percentage change in any statistic, not just the percentage change in GDP. A positive growth rate of GDP implies that the economy is expanding, while a negative growth rate of GDP implies that the economy is contracting. An expanding economy is said to be in a boom , while a contracting economy is said to be in a recession ....
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This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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