BSB113 Study Guide - Final Guide: Gross National Income, Net Domestic Product, Potential Output
Document Summary
Week 8, chapter 12 - gdp, income and economic growth. Made by households for goods and services. Made by firms for new plant, equipment, buildings and inventories. Made by federal state and local governments for goods and services. Net exports [nx] = exports - imports". Gdp = c + i + g + nx. Gdp measures a country"s production of goods and services which is equal to income. More goods and services = more income. Less goods and services = less income. Does not inform us as to how gdp is distributed. Nominal gdp - the market value of final goods and services evaluated at current prices. Real gdp - the volume of final goods and services holding prices constant. Potential gdp - level of gdp if all firms are producing at capacity (potential gdp is not equal to real gdp due to business cycle fluctuations. Increase in real gdp = increase in labour productivity.
