ECON 2030 Lecture : Econ Notes 09 Nov 15
TODAY’S MENU: Monday 09 November 2015
I. BUSINESS
A. Practice Problems
1. Chapter 25: 1, 2, 4, 8, 12, 15-17, 19-21
2. Chapter 29: 1-7, 14-16
B. Third exam: One week from today (Chapters 24, 25, and 29 ONLY)
II. SUBSTANCE
A. Gross Domestic Product (GDP) Flow variance… can’t be negative lowest
value = 0
1. Measure of total production of goods and services in the economy ($18
trillion)
1. Market value
2. Final goods and services
3. within a country
4. Given period of time
a. What counts and what does not → Does NOT count every single
good and service
2. Two methods of measuring: “A dollar spent is a dollar earned.”
a. Income Approach (who is earning)
1. 70% of all income is in the form of wages/salaries (of
individuals)
2. Profit (income for businesses
3. Rents (Income earned by land lords)
4. Lenders (interest rate)
b. Expenditure Approach (who is spending): y = C + I + G + X – IM
i. Consumption (C) plus → largest component, makes up
over 2/3 of GDP, everything you buy (individual)
ii. Investment (I) plus → business builds a new factory,
residential housing
iii. Government spending (G) plus → only goods and
services produced by government, military salaries, teachers,
roads
iv. Exports (X) minus → goods and services sold elsewhere
v. Imports (IM) → goods and services produced elsewhere
B. Economic Growth → % change in REAL GDP, GDP, and Inflation Rates
-Must hold prices constant to find real GDP
