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Economics Chapter 23 Notes

by: Daniel Ochs

Economics Chapter 23 Notes ECON 2

Daniel Ochs

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Economics Chapter 23 Notes
Principles of Economics
Class Notes
Economics, Macroeconomics
25 ?




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This 2 page Class Notes was uploaded by Daniel Ochs on Tuesday October 4, 2016. The Class Notes belongs to ECON 2 at University of California - Los Angeles taught by Rojas in Fall 2016. Since its upload, it has received 6 views. For similar materials see Principles of Economics in Macro Economics at University of California - Los Angeles.

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Date Created: 10/04/16
Thursday, September 22, 2016 Tuesday, September 27, 2016 Chapter 23 Measuring a Nation’s Income - Luxuries: nice to have but not need to have - Microeconomics: study of how individual households and firms make decisions, interact with one another in market - Macroeconomics: study of economy as a whole - Gross Domestic Product (GDP): • Measures total income of society • Measures total expenditure on the economy’s output of goods/services • Income = expenditure - Circular-Flow Diagram • Illustrates GDP as spending, revenue, factor payments, and income • Example Page 5-8 in Notes - GDP: market value of all final goods/services produced within a country in a given time • Market value: goods valued at their market prices - All goods measured in the same units - Things that do not have a market value are excluded • Final goods: intended for the end user • Intermediate goods: used as components or ingredients in the production of goods • Goods: final tangible goods • Services: intangible services • Produced: currently produced goods, not goods produced in the past • Within a country: must occur within a specific country’s borders Given period of time: usually a year or quarterly (3 month period) • 1 Thursday, September 22, 2016 Tuesday, September 27, 2016 - Components of GDP: total spending (Y) = C + I + G + NX • Consumption (C): total spending by households on goods/services • Investment (I): total spending on goods used for the future to produce more goods • Government Purchases (G): spending on goods/services purchased by federal, state, and local government (Does not include transfer payments: social security) • Net Exports (NX): exports - imports - Nominal GDP: values output using current prices (inflation affects) - Real GDP: values output using the prices of a base year (corrected for inflation) - GDP Deflator: 100% x (Nominal GDP / Real GDP) • Measure of the overall deflation - Real GDP per capita is the main indicator of the average person’s standard of living - GDP does not value: • Quality of environment • Leisure time • Non-market activity • An equitable distribution of income - Why do we care about GDP? • Many indicators of quality of life are positively correlated with GDP 2


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