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| The study of how house-holds and firms make decisions and how the interact in markets. |
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The study of economy-wide phenomena, including inflation, unemployment, and economic growth |
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Gross Domestic Product Market value of all final goods and services produced within a country in a given period of time. Measures 2 things at once - Total income of everyone in the economy
- Total expenditure on the economy's output of goods and services
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Difference between the two calculations of GDP
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Spending by households on goods and services, with the exception of purchases of new housing.
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Y= GDP C=consumption I=Investment G=Government purchases NX=Net exports |
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Spending on capital equiptment, inventories, including household purchases of new housing. alt. is the purchase of goods that will be used in the future to produce more goods and services. |
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Spending on goods and services by state, local, and federal governments.
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payment not made in exchange for good or service. eg. social security payment |
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Spending on domestically produced goods by foriegners (exports) minus spending on foriegn goods by domestic residents (imports).
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The production of goods and services valued at current prices
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The production of goods and services valued at constant prices
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a measure of the price level calculated as the ratio of nominal GDP to the real GDP times 100. |
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Quiz: Define real GDP and nominal GDP. Which is a better measurement of economic well being? Why? |
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QUIZ: Why should policymakers care about GDP? |
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