ECON 209 Lecture : chapter19.pdf
Document Summary
National product is the most comprehensive measure of nation"s overall level of economic activity. E. g: if a firm produces worth of ice cream, that ultimately represents income for the firm"s workers, the firm"s suppliers of material inputs, and the firm owners. National product is by definition equal to national income. To measure total output in dollars, we add up the values of the many different goods produced. With base-period prices, we get real national income. Real national income will be denoted by y. One of the most commonly used measures of national income is called gross domestic product (gdp). Real gdp measures the quantity of total output produced by the nation"s economy over the period of a year. The short-run fluctuations show the business cycle. The growth rate fluctuates from year to year. This explain the long term upward trend in figures (i).