a given => include all economic activity “in year.” which takes place during the current year Recognize that essentially all of the goods and services which are produced are also purchased (picture the circular flow diagram) From here we can decompose these purchases into four different categories… consumption expenditures () purchases of newly – produced goods and services by households private investment expenditures () purchases of – newly produced goods and services by firms (e.g., spending on new plants and equipment) () purchases of newly government purchases – produced goods and services by local, state, or federal government net exports () exports minus imports – export a good or service produced in the home – country and sold in a foreign country import a good or service produced in a foreign – country and purchased by someone in the home country trade deficit the excess of imports over exports – trade surplus the excess of exports over imports – that GDP () can be expressed as: …and recognize is production, while the is The “left side” “right side” essentially consumption U.S. GDP (4th Quarter 2009; billions of dollars at annual rates)
“in a given year.” => include all economic activity which takes place during the current year Recognize that essentially all of the goods and services which are produced are also purchased (picture the circular flow diagram) From here we can decompose these purchases into four different categories… consumption expenditures () – purchases of newly produced goods and services by households private investment expenditures () – purchases of newly produced goods and services by firms (e.g., spending on new plants and equipment) government purchases () – purchases of newly produced goods and services by local, state, or federal government net exports () – exports minus imports export – a good or service produced in the home country and sold in a foreign country import – a good or service produced in a foreign country and purchased by someone in the home country trade deficit – the excess of imports over exports trade surplus – the excess of exports over imports …and recognize that GDP () can be expressed as: The “left side” is production, while the “right side” is essentially consumption U.S. GDP (4th Quarter 2009; billions of dollars at annual rates)
06_MeasuringMacroOutcomes_Overhead%20Slides.docx