ECON 1BB3 Chapter Notes - Chapter 5: Gdp Deflator, Gross Domestic Product, Final Good
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ECON 1BB3 Full Course Notes
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Summary of notes from chapter 5 and practice questions. More precisely, gdp is the market value of all final goods and services produced within a country in a given period of time: gdp is divided among four components of expenditure: consumption, investment, government purchases, and net exports. Consumption includes spending on goods and services by households, with the exception of purchases of new housing. Investment includes spending on new equipment and structures, including households" purchases of new housing. Government purchases include spending on goods and services by local, provincial, and federal governments. Real gdp uses constant base-year prices to value the economy"s production of goods and services. The gdp deflator calculated from the ratio of nominal to real gdp measures the level of prices in the economy: gdp is a good measure of economic well-being because people prefer higher incomes to lower incomes. But it is not a perfect measure of well-being.