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Chapter 12: GDP and Growth

Chapter 12: GDP and Growth. Section 1: Gross Domestic Product Section 2: Business Cycles Section 3: economic Growth. WRITE ALL BLACK FONT THANGS. Section 1: Gross Domestic Product. Nation income accounting

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Chapter 12: GDP and Growth

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  1. Chapter 12: GDP and Growth Section 1: Gross Domestic Product Section 2: Business Cycles Section 3: economic Growth WRITE ALL BLACK FONT THANGS

  2. Section 1: Gross Domestic Product • Nation income accounting • A system that collects macroeconomic statistics on production, income, investment, and savings • Gross Domestic Product • The dollar value of all final goods and services produced within a country’s boarders in a given year

  3. Section 1: GDPtypes of goods • Intermediate goods • Goods used in production of final goods • Durable goods • Goods that last for a relatively long time such as refrigerators, cars, and DVD players • Nondurable goods • Goods that last a short period of time, such as food, light bulbs, and sneakers

  4. Different GDP’s • Nominal GDP • GDP measured in current prices • Real GDP • GDP expressed in constant, or unchanging, prices

  5. Not gdp….. • Gross National Product • The annual income earned by U.S. owned firms and U.S. citizens • Depreciation • The loss of capital equipment that results form normal wear and tear

  6. How we add this up… • GDP + income earned outside the U.S. by U.S. firms and citizens – income earned by foreign firms and foreign citizens located in the U.S. = GNP • GNP – depreciation of capital equipment = Net Nation Product • Net Nation Product – excise taxes = National income

  7. Supply and Demand to the extreme • Aggregate supply • The total amount of goods and services in the economy available at all possible price levels • Aggregate demand • The amount of goods and services in the economy that will be purchased at all possible price levels

  8. Section 2: Business Cycles • Business cycle • A period of macroeconomic expansion followed by a period of contraction

  9. Business cycles • Expansion • a period of economical growth as measured by a rise in real GDP • Peak, contraction, trough, expansion • waves

  10. ion’s • Recession • A prolonged economic contraction • Depression • A recession that is especially long and severe • Stagflation • A decline in real GDP combined with a rise in price level

  11. Government influence over this cycle • Only a few ways government can help • Taxes • Federal Interest Rates • Government Spending

  12. Section 3: Economic Growth • Measuring Economic Growth • We can use GDP to measure standard of living, which relates to material goods. • We cannot use it, however as a complete measure of people’s quality of life.

  13. Section 3: Economic Growth • Saving and Investment • Income that is not used for consumption is called saving. • The proportion of disposable income that is saved is called the savings rate.

  14. Section 3: Economic Growth • Technological Progress • Technological Progress is an increase in efficiency gained by producing more output without using more inputs. • Causes of Technological Progress • Scientific Research • Innovation • Scale of the Market • Education and Experience • Natural Resource Use

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