ECN 204 Chapter Notes - Chapter 5: Gdp Deflator

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Microeconomics - how individual households and firms make decisions and hw they interact with another in mkts. Macroeconomics - study of the ecn as a whole, ecn changes that affect many households, firms, and mkts simultaneously gross domestic product (gdp) - total income of a nations, best measure of a society"s ecn well being. Gross domestic product - mkt val of all final goods/ services produced w/in a country in a given period of time. Market prices - meaure the amt ppl are willing to pay for diff goods, they reflect the val of those goods. Ex: price of an orange, apple contributes 2x as much to gdp than orange. Gdp - excludes items produced/ sold illictly (illegal drugs) and item produced and consumed at home (vegetables you grow, marriage = b4 mowing lawn is service but not now) Underestim true amt of productive activity taking place. final intermediate good - ex: paper final good - ex: card.

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