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What is the total income of everyone in the economy called?
GDP (Gross domestic product)
What is the rate at which average prices are rising or falling?
What is the study of how households and firms make decisions and how they interact in markets?
What is the study of economy-wide phenomena, including inflation, unemployment, and economic growth called?
What is the percentage of the labor labor force that is out of work called?
What measures the total income of everyone in the economy and the total expenditure on the economy's output of goods and services?
GDP (gross domestic product)
For an economy as a whole, what must income must equal?
Income must equal expenditure
An economy's income is the same as its expenditure because every transaction has.. what?
Two parties: a buyer and a seller
In the circular flow diagram, households buy goods and services from firms. What does the GDP equal?
the total amount spent by households in the market for goods and services & it equals total wages, rent, and profit paid by firms in the market for the factors of production
GDP measures the flow of money in two ways. What are these two ways?
By adding up the total expenditure by households or by adding up the total income (wages, rent, & profit paid by firms)
For the economy as a whole, expenditure and income are..?
expenditure and income are always the same
What is the definition of GDP (Gross Domestic Product) ?
the market value of all final goods and services produced within a country in a given period of time
What does "GDP is the Market Value" mean?
GDP uses market prices to add together many different kinds of products into a single measure of the value of economic activity. (because market prices measure the amount ppl are willing to pay for diff goods, they reflect the value of those goods)
(Example) When International Paper makes paper, which Hallmark then uses to make a greeting card, what is the paper called? and what is the card called?
paper=intermediate good / card=final good
How do GDP and "goods and services" relate?
GDP includes both tangible goods (food, clothing, cars) and intangible services (haircuts, doctor visits)
How does GDP and "produced" relate?
GDP includes goods and services currently produced. it doesn't include transactions involving items produced in the past
How does GDP and "within a country" relate?
GDP measures the value of production within the geographic confines of a country
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