econlecture3notes - (super equal sign must be equal)...

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9/7/11 GDP GDP – key words nominal GDP – GDP measured in current dollars money value – (roughly) price X output final output • goods and services purchases by final or ultimate users • ignores purchases of intermediate goods to avoid double-counting (and getting too high of a GDP estimate) all goods and services – virtually everything traded/sold on markets domestic output – output produced within US geographic borders period of time – produced over a period of time, such as a quarter or a year what investment does not include: financial investments (ex: purchasing stocks/bonds) purchases or sales of existing or used houses question: Why measure GDP by the expenditure on final output of goods and services? satisfies an important accounting principle data collection procedures
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Unformatted text preview: (super equal sign must be equal) inventory accumulation is possible because of an accumulation of inventory of the years can sell more than produced in one year; counted as part of expenditure capital = not financial; real goods question: Why measure GDP by the incomes earned by the factors of production? satisfies an important accounting principle data collection procedures are possible *basic GDP identity *actual vs. planned magnitudes see next week disadvantage of nominal GDP: changes in nominal GDP pick up BOTH changes in prices and changes in output (whereas we want to separate the two) calculating real GDP keep constant by using only base year prices to calculate GDP changes in real GDP pick up only changes in output...
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