Macroeconomic Fundamentals: Indicators, Cycles, and Policy
Gross Domestic Product
Gross Domestic Product (GDP) is a measurement of the market value of all final goods and services produced in a country during a given period. It is used to show how well an economy is performing compared to previous years.
GDP Inclusions and Exclusions
- GDP includes: Production within a country by foreign firms.
- GDP excludes: Foreign production by a country's firms.
Example: Clothing or products produced in China but sold in the United States would not be part of the U.S. GDP; instead, they would be part of China's GDP.
Intermediate Goods and Services
Intermediate goods and services are goods and services purchased for additional processing and resale.
$C+I+G+(X-M)=GDP$
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- $C\rightarrow$ Consumption
- $I\rightarrow$ Investment
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