ECON 1101 Lecture 4: MacroEcon Notes - Chapter 4
10 Mar 2017
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Consumption - spending by households on goods and services such as food, clothing, and entertainment. It"s split into three parts: consumer durable goods (cars and furniture) consumer nondurable goods (food and clothing) services (haircuts, taxi rides, legal and financial and educational services) Investment - spending by firms on final goods and services, primarily capital goods. Business fixed investment (purchase by firms: machinery, factories, and office buildings) residential investment (construction of new homes and apartment buildings) inventory investment (addition of unsold goods to company inventories) New physical capital - stocks and bonds (financial investments); not considered part of investment spending in calculating gdp. Government purchases - final goods and services bought by federal, state, and local governments run from buying fighter planes to paying school teachers. Does not include transfer payments (payments made by the government in return for which no current goods or services are received, such as social security benefits, unemployment benefits, welfare payments, etc.
