ECON 1002 Study Guide - Fractional-Reserve Banking, Loanable Funds, Gdp Deflator

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15 Apr 2014

Document Summary

Microeconomics: how individual households and firms make decisions and how they interact with one another in markets. To explain the economic changes that are affecting households, firms and markets all together. Gdp (gross domestic product): the market value of all final goods and services produced within a country in a given period of time. Every transaction has two parties: a buyer and a seller. However, in the actual economy households don"t spend all of their income. They pay some in taxes, save some for the future, etc. Some goods are bought by governments and some are bought by firms planning to use them in the future. It also includes the market value for rental housing provided by the economy"s stock of housing. The rent equals both the expenditure and the landlord"s income. However many people own the place they live and do not pay rent. The government includes this owner- occupied housing in gdp by estimating it"s rental value.

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