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Test 1 Notes (97% in the course

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Department
Economics
Course
ECON 2010
Professor
All Professors
Semester
Fall

Description
Econ201008252011Chapter7GDPMeasuringTotalProductionandIncomeMacroeconomicsthestudyoftheeconomyasawholeincludingtopicssuchasinflationunemploymentandeconomicgrowthwhennewsannouncerspoliticiansandcommentatorsrefertotheeconomytheyareoftenaddressingmacroeconomicissuesmosteconomiesdonotexperienceconstantperformancebutunevencyclicalgrowthWithineveryeconomycertainindustrysectorsorregionsmayexperiencetheirowncyclesThustheeconomyisalwaysgivenattentionExpansionaperiodofincreasingeconomicactivitymarkedbyrisinglevelstotalproductionandtotalemploymentRecessiontheperiodofdecliningeconomicactivitywherelevelsoftotalproductionandtotalemploymentdecreaseThereisaspecificconditionwherebyarecessionisofficialBusinesscyclealternatingperiodsofeconomicexpansionandeconomicrecessionEconomicgrowthoftenreferstotheabilityofaneconomytoproduceincreasingquantitiesofgoodsandservicesAsanasideoftenthistermisusedtodescribetherateofgrowthforGDPEconomistssuggesteconomicgrowthproducesabetterstandardoflivingWhyBecausewithincreasedoutputcomesincreasedemploymentandwagesallowingforgreateraccesstogoodsandservicesGovtwillenjoyalargertaxbaseenablinggreaterspendingoneducationinfrastructureandsocialservicesMeasuringTotalProductionGrossDomesticProductGDPistheprimarymeasurebywhicheconomistsevaluateaneconomyGrossdomesticproductGDPthemarketvalueofallfinalgoodsandservicesproducedinacountryduringaperiodoftimetypicallyoneyearItiscalculatedbytakingasummationofalloutputmultipliedbythegoodsownpriceGDPismeasuredusingmarketvaluesnotquantitiesvalueThewordisimportantinthedefinitionofGDPGDPcalculationsaretakenusingrecognizedstandardsNationalIncomeAccountingasetofrulesanddefinitionsformeasuringeconomicactivityintheaggregateeconomythatisintheeconomyasawholeNationalincomeaccountingisawayofmeasuringtotaloraggregateproduction1GDPIncludesonlycurrentproductionGDPincludesonlyproductionthattakesplaceduringtheindicatedtimeperiod2GoodsareclassifiedprimarilyasFinalgoodorserviceagoodorservicepurchasedbyafinaluserawholeofmanypartsIntermediategoodorserviceagoodorservicesthatisaninputintoanothergoodorservicesuchasatireonatruckGDPcalculationsdonotmeasuretotaltransactionsintheeconomyitcountsfinaloutputbutnotintermediategoodsCountingthesaleofbothfinalandintermediategoodswouldresultindoublecountingofeconomicoutputTwowaystoeliminatedoubleCountingCalculateonlyfinaloutput
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