Macroeconomics 111 - Chapter 6

Macroeconomics 111 - Chapter 6 - 2-13 - CHAPTER 6: National...

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2-13 - CHAPTER 6: National Income Accounting - After being blind-sided by the Great Depression, policymakers decided that they needed measures of economic activities -A Keynesian economist, Simon Kuznets, was charged with establishing the methodology fort this in the 1930’s -Received a Noble Prize National Income Accounting – the framework that summarizes and categorizes productive activity over a time period, usually a year The National Income and Product Accounts (NIPA) – the table of accounts for maintaining this information for the U.S. GDP – Output Gross Domestic Product – the market value of final goods and services produced within a country during a specific time period - Valued at market value - Only final goods and services count -Sales at intermediate stages of production are not counted as their value is embodied within the final user good. There inclusion would result in double counting - Excludes financial transaction and income transfers -These to do not reflect production -Must be produced within the geographic boundaries of the country - Net additions to inventory are current period output, so they are also included GDP as Output Produced -GDP includes all outputs sold plus all goods produced but not sold -Inventory is a firms stock of unsold goods - Planned Inventory Changes – management decisions to add or reduce hands-on stock - Unplanned Inventory Changes –results from unexpected sales variations THE TWO WAYS TO MEASURE GDP: EXPENDITURES of finals goods
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Macroeconomics 111 - Chapter 6 - 2-13 - CHAPTER 6: National...

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