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Potential GDP Problems Measuring Output

Potential GDP. Potential GDP indicates what the economy would produce if labor were fully employed at normal rates.Real GDP: Is a measure of how much the economy actually produces.Real GDP: is the measure of the economy adjusted for price changes and inflation.Real GDP: can be though of as the "purchasing power" of the economy..

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Potential GDP Problems Measuring Output

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    1. Potential GDP & Problems Measuring Output Professor Jermaine Whirl Information to use by students of East Georgia College

    2. Potential GDP Potential GDP indicates what the economy would produce if labor were fully employed at normal rates. Real GDP: Is a measure of how much the economy actually produces. Real GDP: is the measure of the economy adjusted for price changes and inflation. Real GDP: can be though of as the "purchasing power" of the economy.

    3. Graphical Presentation of Potential and Real GDP

    4. GDP Info Continued: Real GDP Dips occurred in 1971-1973, 1980-1981, 1990-1991, and 2001(debatable) A strong upward (when Real GDP exceeds potential) is known as a boom. A strong downward fluctuation (when Real GDP is lower than potential) is known as a recession (two consecutive quarters of negative economic growth). A very strong downward fluctuation (when Real GDP is really lower than potential) is known as a depression.

    5. Problems in Measuring Output Quality Changes: With so many products and changes every year GDP statisticians try to make adjustments for these changes in quality. Service Output: Defining and measuring the output service sector is becoming very complex. Some business have mixed service departments in which trying to differentia could be a hard task. Nonmarket Goods: It's hard to put a value on things such as housework, or raising kids.

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