New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Econ 202

by: Danielle Notetaker

Econ 202 Econ 202

Danielle Notetaker
GPA 3.2

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Notes for lecture Jan. 11th week two
Urbancic M
Class Notes
Econ, Economics
25 ?




Popular in macroeconomics

Popular in Department

This 4 page Class Notes was uploaded by Danielle Notetaker on Monday January 11, 2016. The Class Notes belongs to Econ 202 at University of Oregon taught by Urbancic M in Spring2015. Since its upload, it has received 20 views.

Similar to Econ 202 at UO


Reviews for Econ 202


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 01/11/16
Measuring GDP 01/12/2016 ▯ The business cycle refers to the short-run fluctuations in economic activity that can cause output to be above or below the long-run trend. ▯ ▯ An expansion (or boom) is the period in the business cycle from a trough up to a peak, during which output and employment rise. A contraction (or recession, or slump) is the period in the business cycle from a peak down to a trough, during which output and employment fall.  Note that as defined by economists a recession is not the period between a peak and the next time the economy returns to that previous peak level (which is often the typical public interpretation of the word). ▯ A recession is a period during which aggregate output declines.  There is no pre-set way to determine when a recession has started.  The general rule of thumb is that two consecutive quarters with decreasing GDP are typically considered to mark the beginning of a recession. ▯ A prolonged and deep recession is popularly known as a depression.  There is no technical definition of a depression, and economists never use the term in any standard or rigorous way in any context. ▯ Gross domestic product (GDP) is…  the total market value of all final goods and services… [i.e., intermediate goods or services don’t count]  produced within a given period… [i.e., previously produced goods or services don’t count]  by factors of production located within a country. [i.e., goods or services made elsewhere don’t count] [Transfers of money and assets that don’t involve theproduction of a good or service also don’t count.] ▯ ▯ Why does GDP count the “market value”? We can’t just count quantities. ▯ ▯ In 2010 the United States produced:  12 billion bushels of corn  8 million cars ▯ ▯ Just looking at quantity-produced numbers, cornseems more “important” to our GDP relative to cars. ▯ ▯ To add dissimilar things (like apples, oranges, corn,automobiles, legal services, and so forth) we measure the total market value of production. ▯ ▯ Quantity x Price =Market Value ▯ Corn 12 billion bushels x $5 = $60 billion ▯ Cars 8 million vehicles x $30,000 = $240 billion $300 billion ▯ ▯ Output Equals Income Using the total market value means that for the purposes of economists output and income are essentially synonymous. ▯ ▯ Output = GDP = Income ▯ ▯ Why Goods AND Services? ▯ Goods  Tangibles  Food, clothing, cars, houses ▯ Services  Intangibles  Health care, education, entertainment, travel, banking ▯ The composition of our industries and economy has greatly changed over the last 50 years; services are much more important than before. ▯ ▯ Intermediate goods are goods that firms repackage or bundle with other goods to be sold at a later stage. ▯ Examples of intermediate goods:  Milk sold to a coffee shop  Tires sold to a car manufacturer  Drywall sold to a home builder ▯ Final goods are goods sold to the final users, or consumers. ▯ ▯ To get an accurate GDP estimate and avoid double counting final goods (and final services) are included in GDP but not intermediate goods (or intermediate services). ▯ we need to avoid double-counting.  We don’t want to recount a good that was produced lastyear (or the year before, or many years ago). ▯ Examples:  A used car (even it was built in the same year, since wedon’t want to double count it)  A house that was built before the year in question ▯ ▯ For instance, purchases of stocks or bonds or land(and so on and so forth) do not count. ▯ However, the fees that pay for services involved in those transactions (like a broker’s fee or payments to a real-estate agent) do count, since these are new final services ▯ ▯ Gross national product (GNP) is the same as GDP except that:  GNP includes goods and services produced abroad by domestically owned factors of production Example: the production of a Ford assembly plant in Brazil  GNP excludes goods and services produced domestically by foreign- owned factors of production o Example: the production of a Toyota assembly plant in Mississippi ▯ Ownership of multinational companies is complicated.  GDP only looks at where the production happens.  We will only look at GDP data in this class—never GNP. ▯ ▯ 3 Methods for calculating GDP ▯ The expenditure approach computes GDP by measuring the total amount spent on all final goods during a given period. (We only use) ▯ The income approach computes GDP by measuring the income—wages, rents, interest, and profits—received by all factors of production in producing final goods. ▯ The value-added approach computes GDP by looking at the value added at each intermediate step of production. ▯ ▯ The Expenditure Approach: Categories The Bureau of Economic Analysis (BEA) is the U.S. government agency that tallies GDP data, a task is called national income accounting. ▯ GDP = C + I + G + NX ▯ C-Consumption ▯ I-Investment ▯ G-Government ▯ P-Purchases ▯ NX-Net Exports ▯ ▯ Consumption ▯ Personal consumption expenditures (C) are expenditures by consumers on the following:  Durable goods: o Goods that last a relatively long time, such as cars or appliances. o Affected by cyclical fluctuations.  Nondurable goods: o Goods that are used up fairly quickly, such as food or clothing. o (Not affected much by cyclical fluctuations.) ▯ Services: Economic activities that do not involve theproduction of physical things, such as legal services,medical services, or education. ▯  GDP is not the market value of total sales during a period—it is the market value of total production.  Units produced but not sold are counted towards businesses inventories as part of the investment category.  The relationship between total production and total sales is: GDP = final sales + change in business inventories ▯ ▯ ▯ ▯


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Allison Fischer University of Alabama

"I signed up to be an Elite Notetaker with 2 of my sorority sisters this semester. We just posted our notes weekly and were each making over $600 per month. I LOVE StudySoup!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.