ECON 2010 Chapter : Ch6 Econ
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Performance and policy: real gdp, or real gross domestic product, measures the value of final goods and services produced within the borders of a given country during a given period of time, typically a year. It differs from real gdp in that nominal gdp is in current dollars: real gdp is the appropriate measure one should use to determine changes in economic activity across time. This is because nominal gdp captures both changes in output and changes in prices over time. The miracle of modern economic growth: rapid and sustained economic growth is a modern phenomenon. This what economists mean when they refer to investment : households are the principal source of savings and businesses are the main economic investors, financial institutions collect savings from households and lend these funds to businesses. Thus, savings and investment are fundamentally linked together. Uncertainty, expectations, and shocks: decisions about savings and investment are complicated by the fact that the future is uncertain.
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