ECON 20B Chapter Notes - Chapter 23: Greeting Card, Seasonal Adjustment, Final Good

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ECON 20B Full Course Notes

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Microeconomics - the study of how individual households and firms make decisions and how they interact with one another in markets. Macroeconomics - study of the economy as a whole. Gdp measures the total income of everyone in the economy, and the total expenditure on the economy"s output of goods and services (these two are the same!) For an economy as a whole, income must equal expenditure. An economy"s income is the same as its expenditure because every dollar spent by a buyer is a dollar of income for some seller. Gdp equals the total amount spent by households in the market for goods and services and it also equals the wages, rent, and profit paid by firms in the markets for the factors of production. Economy is more complicated than that because households do not spend all of their income and do not buy all the goods and services in the market, some are bought by the government.

Related Questions

Which of the following statements about GDP is correct

A) Money continuously flows from households to firms and then back to households, and GDP measures this flow of money

B) GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy’s output of goods and services.

C) While not perfect, GDP is generally regarded as the best single measure of a society’s economic well-being.

D) All of the above are correct.

emeraldmarten620

What is the market for factors of production?

What is the market for factors of production?
1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages.
What is the money market?
1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.
Who are the three economic actors in the circular flow model?
1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.
How is the national income of an economy determined?
1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.
What is GDP?
1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

5. Microeconomics is best described as the study of:

A) the choices made by individual households, firms, and governments.

B) inflation, unemployment, gross national product, and the nation's economy as a whole.

C) how markets interact in the aggregate economy.

D) marginal changes in the economy.

yelloweagle292

ECON 20B Chapter Notes - Chapter 23: Greeting Card, Seasonal Adjustment, Final Good

ECON 20B Full Course Notes

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