Economics 1022A/B Study Guide - Final Guide: Real Interest Rate, Loanable Funds, Nominal Interest Rate

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9 Jan 2013
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ECON 1022A/B Full Course Notes
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ECON 1022A/B Full Course Notes
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Gross domestic product (gdp) market value of all final goods and services produced with a country in given time period. Total production measured by market value of each good. Only new final goods (bought by final users) measured, not intermediate goods (bought by firms from firms, used as inputs in production). Gdp measures total production and total income and total expenditure. Circular flow of expenditure and income shows four economic sectors (firms, households, governments, rest of world) operating in factor markets and goods (and services) markets. Households sell factor services to firms in return for income total household income = aggregate income (y). Firms produce goods and services, and sell consumption expenditure (c) to households. Firms" expenditures on investment (i = purchase of new capital + additions to inventory). Governments buy goods and services from firms (government expenditures (g)). Governments also collect taxes and make financial transfers to households and firms, but these not part of circular flow.

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