Review I - Review I Cheryl Qi FIGURE 1 The Circular-Flow...

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Review I Cheryl Qi
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T H N K G L E A N E C O M S 2 FIGURE 1: The Circular-Flow Diagram Markets for Factors of Production Households Firms Income Wages, rent, profit Factors of production Labor, land, capital Spending G & S bought G & S sold Revenue Markets for Goods & Services
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M E A S U R N G A T O S C 3 …the market value of all final goods & services produced within a country in a given period of time. Gross Domestic Product (GDP) Is… Final goods : intended for the end user Intermediate goods : used as components or ingredients in the production of other goods GDP only includes final goods – they already embody the value of the intermediate goods used in their production.
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M E A S U R N G A T O S C 4 The GDP Deflator The GDP deflator is a measure of the overall level of prices. Definition: § One way to measure the economy’s inflation rate is to compute the percentage increase in the GDP deflator from one year to the next.
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