ANTHRO 157 Lecture Notes - Lecture 13: Gross Domestic Product, Deflation, Full Employment
Course CodeANTHRO 157
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Economics as circular flow
Households provide inputs (natural resources, labor, capital, entrepreneurship,
knowledge) to businesses -> converts inputs to outputs (goods / services ) for
consumers -> households receive income from rent, wages, interest etc. Business
receive revenue from consumer purchases.
Govt supplies many publicly provided goods and services (highways, schools,
police, court, health services, unemployment insurance, social security etc) that
Changes in one flow affect the other.
(ex: govt raise taxes -> households have less $ to spend -> lower spending =
business reduce production -> economy declines -> unemployment rise)
How do economic growth, full employment, price stability, inflation indicate
nation's economic health?
3 macroeconomic goals
1. Economic growth
2. Full employment
3. Price stability
Nation's economic well-being depends on these goals
Striving for economic growth
Economic growth - increase in nation's outputs of goods and services
More a nation produces, the higher standard of living.
Gross domestic product (GDP) - total market value of goods&services produced
within nation's border each year.
• When GDP rises, economy is growing.
• Rate of growth in real GDP is important
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