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This 3 page Class Notes was uploaded by Shelby Sorrell on Friday October 9, 2015. The Class Notes belongs to ECO2013 at a university taught by Deborah Paige in Fall 2015. Since its upload, it has received 28 views.
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Date Created: 10/09/15
Module 3 Key Points GDP which is both national output and national income equals CIGXn In the US consumption is the largest part of GDP app 23 GDP needs to be adjusted for population and changes in the price level for comparison purposes Real measures are generally more useful than nominal ones GDP has issues that we don39t know how to fix or don39t agree how to fix When comparing GDP between countries with VERY different costs of living some kind of Purchasing Power Parity adjustment is preferred For all its flaws GDP measures give the best overall picture of production in an economy NDP is preferred in order to see what an economy gained GDP is preferred in order to see what an economy made In the long run GDP seems to grow relatively smoothly at about 2 per year In the short run GDP seems to have significant ups and downs known as the business cycle FuII employment the max production and employment without major inflation is where we want the economy to be The economy often is not at full employment and we either have higher than normal unemployment or higher than normal inflation Usually unemployment and inflation move in the opposite direction in the short run but not always This is because as the economy gets stronger GDP rises there are more jobs unemployment falls but more upward pressure on rprices inflation rises Module 3 Vocabulary and Formulas GDP Gross Domestic Product C G Xn FINAL GOOD NDP Net Domestic Product GDP depreciation GDP PER CAPITA GDP population NOMINAL OR CURRENT DOLLARS ex Nominal GDP abbreviated as nGDP REAL OR CONSTANT DOLLARS ex Real GDP abbreviated as rGDP PRICE INDEX Price level in Yr X Price level in base year x 100 GDP DEFLATOR nGDP rGDP x 100 ISSUES WITH GDP MEASURES Unreported productionincome Underground economy Home producedhome consumed production Quality of life issues pollution volunteer work art etc Quality of products Composition and distribution Counts Gov t production at cost National cost of living purchasing power parity issues NATIONAL BUREAU OF ECONOMIC RESEARCH NBER BUSINESS CYCLE traditional 4 phase system still used by the NBER Recession Trough Expansion Peak GDP GROWTH RATE new GDP previous year GDP previous year GDP x 100 GENUINE PROGRESS INDEX GPI