ECON 102 Chapter 7: Econ Chapter 7 Notes
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ECON 102 Full Course Notes
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Chapter 7 gdp & the cpi: tracking the macroeconomy. Imports (im) lead to a flow of funds out of the economy. Inventories = stocks of goods/raw materials held to facilitate business operations. Investment spending/investment (i) = spending on productive physical capital (e. g. new machinery, equipment, building construction) and on changes to inventories: financial system exists to transfer the private savings of households to firms for investment purposes. Gross domestic product: final goods/services are sold to the final or end user (e. g. car) Add the total value of all final goods/services produces domestically: expenditure approach. Add the spending on all domestically produced goods/services (aggregate expenditure) Gdp = c + i + g + x - im. 2: domestically produced final goods/services, new productive physical capital, changes in inventories, net exports are the difference between the value of exports and imports. Real gdp: a measure of aggregate output: aggregate output = the economy"s total quantity of output of final goods/services.
