ECN 204 Chapter Notes - Chapter 5: Gdp Deflator, Transfer Payment, Gross Domestic Product
30 Jan 2013
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Microeconomics: the study of how households and firms make decisions and how they interact in markets. Macroeconomics: the study of economy wide phenomena, including inflation, unemployment and economic growth. Gdp: the market value of all goods and services produced within a country in a given period of time. Gdp measures two things at once: total income of everyone in the economy and total expenditure on the economy"s output of goods and services. Gdp can measure both total income and total expenditure because these two things are really the same. For economy as a whole, income must equal expenditure. Gdp adds together many different kinds of products into a single measure of the value of economic activity. There are some products that gdp excludes because measuring them is so difficult. It also excludes most items that are produced and consumed at home, and therefor never enter the market place.
