ECON 2105 Unit 2: (Chp 6-9) Measurement, Finance, and Economic Growth
Chapter 6: GDP and The Measurement of Progress - Textbook Summary 6.1
Gross Domestic Product (GDP) - The market value of all finished goods and services produced within a country in a year Gross Domestic Product (GPD) per capita - GDP divided by a countries population Taking Apart the Defintion... "GDP is the Market Value" - Measuring an economies total output including many different goods and services, some are more valuable than others. - Because of this, to measure total output you use market values to determine how much a good or service is worth and then sums the total - Using prices in the calculations gives greater weight to more highly valued goods/services in the marketplace - To Find Market Value = multiply price by quantity "Of All Finished" - Intermediate goods and services are sold to firms and then processed with other goods/services for sale at a later stage - A finished good is sold to its final user and then consumed or held in personal inventory - Example is computer chip is an intermediate good bc it was sold to dell, the computer is the finished good because it was sold to its final person and you don't want to count the chip twice - You do count the production of machinery and equipment used to produce other goods as part of GDP - Example is tractor helps produced soybeans, it is not a finished product, but both tractor production and soybean production add to GDP "Goods and Services" - Output of an economy includes both goods and services - Services provide a benefit to individuals without the production of tangible output - Example is paying a consultant to fix a software problem on a computer and its market value is included in GDP (Haircuts, Transportation, Entertainment, Medical Care) - Since 1950, the portion of US GDP created by production of services has increased from under 50% to almost 70% (attribute to medical services and recreati
Chapter 6: GDP and The Measurement of Progress Overview, Objective, and Takeaways
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Chapter 6: GDP and The Measurement of Progress Shit to Remember
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Chapter 6: GDP and The Measurement of Progress - Textbook Summary 6.0
- A rough way of summarizing changes in economic output and the standard of living is by looking at Gross Domestic Product (GDP) and its GDP per capita, (two statistics designed to measure the value of economic production) - GDP per capita is a rough measure of a country's standard of living - Liberalization reforms can cause GDP per capita to grow rapidly -India growing wealth and falling poverty shown by real GDP - Higher GDP does not mean Higher GDP per Capita based on factor of population Chapter will explain: - What the GDP statistics means and how is it measured - The difference between the level of GDP and the growth rate of GDP - The difference between nominal GDP and real GDP - How growth in real GDP per capital is a standard measure of economic progress - The use of GDP in business cycle measurement - Problems with GDP as a measure of output and welfare
Macroeconomics Unit 2 Goals - Chapter 6: GDP and The Measurement of Progress - Chapter 7: The Wealth of Nations and Economic Growth - Chapter 8: Growth, Capital Accumulation, and the Economics of Idea - Chapter 9: Saving, Investment, and the Financial System
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The US nominal gross domestic product is __________ legally produced __________ within a given __________ and valued at ___________?
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The market value of which items would be considered double/multiple counting in the calculation of GPD - New skateboard bought for niece - Wheels used to produced a skateboard - Used copy of the Tony Hawk video game - Used skateboard you buy for your brother - Previously owned collectors skateboard - Commission paid to the seller of a previously owned collectors skateboard - Ticker for the X games bought from a person on the street corner - New building for Tony Hawk industries
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What if the value of GPD when given? C = 1000 I = 1000 G = 800 X = 400 M = 600
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What must have happened to net exports to cause this change when explained? 2015 GDP - 50 million 2016 GDP - 48 million - No changes in personal consumption expenditures, gross private domestic investment, and government spending are recorded
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Which country has a higher GPD per capital? Jollyland - population of 1000 - GPD of 1 million Follyland - population of 8000 - GPD of 8 million
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Which goods would be included in calculating the GPD for the US? - GM's assembly and sale of cars in Mexico - Resale of used textbooks to college students - Sale of wheat to Mrs. Baird's bakery - Honda's assembly and sale of cars in the US - Ocean spray purchases plastic to make bottles - Old navy purchases mannequins to display clothes
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Which measure of GDP can be calculated given one has data of these categories? - Net interest, government spending, corporate profits, net exports, gross private domestic investment, rental income, personal consumption expenditures
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Which of the following characteristics about Econville could be determined based on it's GPD? - Incomes are very equally distrubterd - Virtually no pollution - There are no underground or informal markets - None of the above can be determined based on their GDP
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