Module The Circular Flow and Gross Domestic Product

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ModuleThe Circular Flow and Gross Domestic
Product
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• KRUGMAN'S
• MACROECONOMICS for AP

Margaret Ray and David Anderson
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What you will learnin this Module

• How economists use aggregate measures to track
  the performance of the economy
• The circular flow diagram of the economy
• What gross domestic product, or GDP, is and the
  three ways of calculating it

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The National Accounts

• National Income and Product Accounts
• Reliability

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The Simple Circular-Flow Diagram
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The Expanded Circular-Flow Diagram
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Gross Domestic Product

• Final goods and services
• Intermediate goods and services
• GDP
• Value of all goods and services produced (value
  added approach)
• Aggregate Spending (C I G XN)
• Total Factor Income

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The Components of GDP
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What's Included Domestically produced final goods and services, including capital goods, new construction of structures, and changes to inventories Not Included Intermediate goods and services Inputs Used goods Stocks Bonds Foreign produced goods services