Measuring a Nation's Income, Promoting More Efficient Markets
CAUSES OF INFLATION In the ucta ilcd analysis of inn,lIion given above, we have referred to the basic cause of in llanon, Ihat is when aggregate demand for output tends to be excessive relation to Ole supply of output Thus.tho causes of inflation may be grouped under...
Measuring a Nation's Income
PROBLEMS AND APPLICATIONS 1. What components of GDP (if any) would each of the following transactions affect? Explain. a. A family buys a new refrigerator. b. Aunt Jane buys a new house. c. Ford sells a Mustang from its inventory. d. You buy a pizza. e. California...
Measuring a Nation's Income
QUESTIONS FOR REVIEW 1. Explain why an economy’s income must equal its expenditure. 2. Which contributes more to GDP the production of an economy car or the production of a luxury car Why? 3. A farmer sells wheat to a baker for $2. The baker uses the wheat to...
Measuring a Nation's Income
CONCLUSION This chapter has discussed how economists measure the total income of a nation. Measurement is, of course, only a starting point. Much of macroeconomics is aimed at revealing the long-run and short-run determinants of a nation’s gross domestic...
Measuring a Nation's Income
WHO WINS AT THE OLYMPICS Every four years, the nations ~f the world compete in ‘the Olympic Games. When the games end commentators use the number of-medals a national take~home as ‘a measure of success. This measure seems very different from the GDP...
Measuring a Nation's Income
INTERNATIONAL DIFFERENCES IN GDP AND THE QUALITY OF LIFE One way to gauge the usefulness of GDP as a measure of economic well-being is to examine international data. Rich and poor countries have vastly different levels of GDP per person. If a large GDP leads to...
