ECON 2H03 Lecture Notes - Gdp Deflator
Document Summary
Microeconomics: the study of how individual households and firms make decisions and how they interact with one another in markets. Macroeconomics: the study of the economy as a whole. Gdp increases if prices increases or if output increases. For an economy as a whole, income must equal expenditure. Real gdp: gdp measured in some base year prices. Answers the question what should be the value of the goods and services produced this year if we valued these goods and services at the prices that prevailed in some specific year in the past? . Shows how the economy"s overall production of goods and services change over time. Real gdp uses constant base year prices to place a value on the economy"s production of goods and services. Uses current prices to place a value on the economy"s production of goods and services. Gdp deflator: a measure of the price level.