ECON 100 Lecture Notes - Lecture 5: Gross Domestic Product, Business Cycle, Government Spending
Document Summary
Microeconomics: behavior of individual people, firms, and industries. Macroeconomics: study of the economy of an entire nation or society. Measuring the economy: economists measure the total output of an economy as a gauge of its overall health. An economy that produces a large amount of output is a healthy economy. If output falls for a certain period, there is something wrong in the economy. Sum of all the output from coffee shops, doc offices, and all other firms that produce goods and services within a nation"s borders. Why is gdp important indicator: measuring living standards. Gdp data tells us something about living standard. Higher gdp= we are doing better (used as measure of living standards) Gdp data is also used to measure economic growth: think of economic growth as changes in living standards over time, when economies grow, living standards rise. What does real mean in terms of gdp: real gdp is gdp adjusted for changes in prices.