Chapter 7 - Chapter 7: Taking the Nation's Economic Pulse...

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Chapter 7: Taking the Nation’s Economic Pulse Focus: What is GDP? How is GDP calculated? When making comparisons over time, why is it important to adjust nominal GDP for the effects of inflation? What do price indexes measure? How can they be used to adjust for changes in the general level of prices? Is GDP a good measure of output? What are its strengths and weaknesses? GDP - The market value of all final goods and services produced within a country during a specific period. Simon Kuznets (1901-1985) - Provided methodology for modern national income accounting and developed the first reliable national income measures for the US. Kuznets is often referred to as the “father of national-income accounting.” A native Russian, he immigrated to the US at the age of 21 and spent his academic career teaching at the University of Pennsylvania, Johns Hopkins University, and Harvard. Intermediate Goods - Goods purchased for resale or for use in producing another good or service. Final Market Goods and Services - Goods and services purchased by their ultimate user. Personal Consumption - Household spending on consumer goods and services during the current period. Consumption is a flow concept. Private Investment - The flow of private-sector expenditures on durable assets (fixed investment) plus the addition to inventories (inventory investment) during a period. These expenditures enhance our ability to provide consumer benefits in the future.
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This note was uploaded on 04/08/2008 for the course ECO 203 taught by Professor Pongracic during the Spring '08 term at Hillsdale.

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Chapter 7 - Chapter 7: Taking the Nation's Economic Pulse...

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