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Chapter 5: Measuring the Economy's Output
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Define GDP
Gross Domestic Product:
The total value of goods and services produced annually by a country
Define Intermediate Goods
Goods that will be resold or that require further processing or manufacturing
Define Final Goods
Goods that will not be resold and do not require further processing or manufacturing
What are the two ways of measuring GDP?
1. Income Approach
Total income generated by the production of goods and services
2. Expenditures Approach
Expenditures produced by final goods and services
What is the formula for the expenditures approach?
GDP = C + I + G + X
C - personal consumption expenditures
I - gross investment
G - government purchases
X - net exports
Define GNP
Gross National Product
Total income that residents within a country earn in a year
What are the two types of GDP?
1. Nominal GDP
Valued at current prices
Is not corrected for inflation
Does not reflect the economic well being of a country
2. Real GDP
Values prices according to a base year
Is corrected for inflation
Reflects the economic well being of a country
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Anonymous
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146143
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Chapter 5: Measuring the Economy's Output
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Chapter 5: Measuring the Economy's Output
Updated
4/7/2012, 2:17:50 AM
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