Chapter 5: Measuring the Economy's Output

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Anonymous
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146143
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Chapter 5: Measuring the Economy's Output
Updated:
2012-04-06 22:17:50
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GDP
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Chapter 5: Measuring the Economy's Output
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  1. Define GDP
    • Gross Domestic Product:
    • The total value of goods and services produced annually by a country
  2. Define Intermediate Goods
    Goods that will be resold or that require further processing or manufacturing
  3. Define Final Goods
    Goods that will not be resold and do not require further processing or manufacturing
  4. 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
  5. 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
  6. Define GNP
    • Gross National Product
    • Total income that residents within a country earn in a year
  7. 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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