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What are the four ways to measure an economy's strength?
- 1. Standard of living
- 2. Employment and Types of Employment
- 3. International Trade
- 4. Production
What is GDP? What does it do?
- The total market value of all final goods and services produced annually.
- It can measure economic strength, compare how a country is performing over time, and provide a comparison of how a country performs globally
What is the formula for GDP?
What does the "C" represent in the GDP formula?
- Personal Consumption Expenditures
- Combination of what households spend annually on durables, nondurables, and services
- Largest component of GDP
What does the Ig stand for in the GDP formula?
- Gross Private Domestic Investment
- Combination of final purchases of businesses, construction expenses, and increase/decrease of inventory
- Measures overall strength of a firm or industry
- Shows growth or lack of growth in business sector
What does the G stand for in the GDP formula?
- Government Purchases
- Combination of government purchases of final goods, services, and public sector capital
What does the Xn stand for in the GDP formula?
- Net exports
- Domestically produced goods or services that are exported out of the country
What in inflation? What is used to compensate for this?
- The fluctuation of the value of money as it increases or decreases over time.
- Real GDP
What is the important element for all economies?
What are the 4 factors involved in growth?
- 1. Specialization of firms
- 2. Increase in personal consumption
- 3. Globalization
- 4. Technology
_____ in technology = _____ in production costs = _____ in production
What three things do some economists criticize about growth?
- 1. Environment degradation - pollution - greenhouse gases
- 2. Human stress in changing lifestyles
- 3. Depletion of natural resources
What three things do some economists encourage about growth?
- 1. Improved standard of living
- 2. Question environmental impact or encourage green industries
- 3. Question limited natural resources and encourage selective removal of resources