Because in this equation Y captures every segment of the national economy

Because in this equation Y captures every segment of the national economy

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Because in this equation Y captures every segment of the national economy, Y  represents both GDP and the national income. This because when money changes  hands, it is expenditure for one party and income for the other, and Y, capturing all these  values, thus represents the net of the entire economy.  Let's briefly examine each of the components of GDP.  Consumer spending, C, is the sum of expenditures by households on durable  goods, nondurable goods, and services. Examples include clothing, food, and  health care.  Investment, I, is the sum of expenditures on capital equipment, inventories, and  structures. Examples include machinery, unsold products, and housing.  Government spending, G, is the sum of expenditures by all government bodies  on goods and services. Examples include naval ships and salaries to government  employees.  Net exports, NX, equals the difference between spending on domestic goods by 
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This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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Because in this equation Y captures every segment of the national economy

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