In the real world

In the real world -...

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In the real world, the market values of many goods and services must be calculated to  determine GDP. While the total output of GDP is important, the breakdown of this output  into the large structures of the economy can often be just as important. In general,  macroeconomists use a standard set of categories to breakdown an economy into its  major constituent parts; in these instances, GDP is the sum of consumer spending,  investment, government purchases, and net exports, as represented by the equation:  Y = C + I + G + NX  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. 
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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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In the real world -...

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