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- Economic Goals
- Real GDP > 3%
- GDP Defined
- Gross domestic product or GDP is the market value of all the final goods and services produced within the boundary of a country in a given time period.
- Current Prices (Norminal VS Real)
- Year Q P GDP
- 2012 10x$1=$10
- 2013 10x$2=$20
- Real GDP= Nominal GDP- Inflation(price Increases)
- Final Goods vs. Intermediate Goods
- All intermediate values are included in the final good.
- Why measure GDP?
- Economic Growth
- Creation of jobs
- Standard of living
- Increase/decrease in income
- Increase/decrease in production
- Expenditure Approach
- Total expenditure is the total amount received by producers of final goods and services
- C= Consumption; I= Investment
- G= Government
- NX=Net Export=export-import
- Total expenditure=C+I+G+NX
- Income approach
- Labor earns wages, capital earns interests
- Land earns rent, Entrepreneurs earn profits
- Circular FLows in the US Economy
- Consumption expenditures by household
- $11,430 billion; 68.6%
- The expenditures by households on consumption goods and services
- Durable Goods
- Non-durable goods
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