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Gross Domestic Product (GDP)
the market value of all final goods and services produced within a country in a given period of time
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"Market Value"
- price equals its value measured in same units: dollars
- no value is excluded
- EX: cleaning your own house
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"Final Goods"
intended for end user
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Intermediate Goods
- used as components or ingredients in production of other goods
- DON'T COUNT
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"Goods and Services"
- tangible goods and intangible services
- DVD's and cell phone service
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"Produced"
only current goods
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"Within a Country"
measures production within a country's borders whether done by foriegners or not
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"Given Period of Time"
usually 1 year or quarter (3 months)
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Consumption (C)
- total spending by households on goods and services, with the exception of purchases of new housing
- include rent payments
- Imputed rental value: how much house would rent for in area, not purchase price
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Investment (I)
total spending on capital equipment, inventories, and structures, including household purchases of new housing
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Government Purchases (G)
- spending on goods and services by local, state, and federal governments
- EX: social security
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Net Exports (NX)
spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
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Total Spending in GDP
C + I + G + NX
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Nominal GDP
production of goods and services valued at current prices
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Real GDP
production of goods and services valued at constant prices
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GDP Deflator
measure of the price of level calculated as the ratio of nominal GDP to real GDP times 100
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