macro economics

macro economics - - GDP - National Income Accounting:...

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- National Income Accounting: measures the economy’s overall performance, allows economicsts to asses the health of the economy by comparing levels of production at regular intervals. It tracks the long run course of the economy to see whether it has grown, been constant, or declined, and make policies that will guard and improve economy’s health. GDP - aggregrate output: primary measure of the economy’s performance is annual total output of goods and services. - GDP: defines aggregate output as the dollar value of final goods made within the boarders of a given country during a given period of time. - It is a monetary measure and helps compares the outputs of various goods produce in a given time - Ex: sofas and computers cost 500 and 2000 respectively. o 3 sofas + 2 computers = 5500, 2 sofas + 3 sofas = 7000 o GDP says the second one yields a greater output because society places a higher monetary value on the 2 nd output. Multiple Counting - GDP includes final goods and ignores intermediate goods - Intermediate goods: goods and services purchased for resale of manfufacturing - Final goods: goods that are consumed, capital, bought by final users. - The value of final good already includes intermediate goods - Value Added: it is the difference between what a firm pays for inputs and what it receives from selling the products which is paid out as wages, rent, profit, interest. It is also important to exclude nonproduction transactions: financial and secondhand sales - financial o public transfer payments: social security, welfare, veteran’s payments, payments that the government makes directly to households o private transfer payments: money that prents give children or cash gifts at given holidays o stock market transactions - secondhand sales: ex: you sell your car to a friend. It does not count as GDP Two Ways of Looking at GDP: Spending and Income - the expenditure approach and the income approach Expenditure Approach - you add up all the spending on final goods and services that have taken place throughout the year
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macro economics - - GDP - National Income Accounting:...

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