This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Chapter 16: Spending, Income and GDP: Gross Domestic Product (GDP): the market value of the final goods and services produced in a country during a given period Includes only final goods Y= C + I + G + NX (Consumer spending + Investments + Government spending + Net Exports) Value Added: the market value of its product or service minus the cost of inputs purchased from other firms (Revenues Cost of purchased inputs = value added) The value added by each firm represents the portion of the value of the final good or service that the firm creates in its stage of production Consumption Expenditure: spending by households on goods and services Nominal v. Real GDP: nominal: valued in current year, real: valued in relation to base year Problems with GDP: excludes important factors including peoples well-being, the value of unpaid volunteer services, quality of the environment and quality of life, and degree of economic inequality Chapter 17: CPI & Inflation: Hyperinflation: inflation rate is extremely high Real Wage: Wage/CPI of that yr. Allows you to compare minimum wages b/w years Deflating: dividing a nominal value by a price index to express it in real...
View Full Document