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MGEB06H3 Study Guide - Final Guide: Root Mean Square


Department
Economics for Management Studies
Course Code
MGEB06H3
Professor
Iris Au
Study Guide
Final

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Macroeconomic
University of Toronto
CH 2:
Gross domestic product, or GDP, tells us the nation’s total income and the
total expenditure on its output of goods and services.
consumer price index, or CPI, measures the level of prices
GDP = (Price of Apples × Quantity of Apples) + (Price of Oranges × Quantity
of Oranges)
the sale of used goods is not included as part of GDP only currently
produced goods and services are part of GDP
Production for inventory increases GDP just as much as production for final
sale. A sale out of inventory, however, is a combination of positive
spending (the purchase) and negative spending (inventory
disinvestment),so it does not influence GDP
GDP is also the total value added of all firms in the economy = final selling
price of the good
Imputed (estimated) rent if part of GDP
Real GDP = (2002 Price of Apples × 2003 Quantity of Apples) + (2002 Price
of Oranges × 2003 Quantity of Oranges).
Nominal GDP = (2003 Price of Apples × 2003 Quantity of Apples) + (2003
Price of Oranges × 2003 Quantity of Oranges)
GDP Deflator = Nominal GDP / Real GDP
Expenditure Approach: Y= C+I+G+NX  Doesn’t include transfer payments
or financial investments
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