Understanding Business Cycles and Gross Domestic Product (GDP) - Prof. George Chikhladze, Study notes of Managerial Economics

Download Understanding Business Cycles and Gross Domestic Product (GDP) - Prof. George Chikhladze and more Study notes Managerial Economics in PDF only on Docsity! Business Cycle: alternating periods of economic expansion and economic recession. Expansion: production and employment are increasing. Recession: production and employment are decreasing. Economic Growth: the ability if an economy to produce increasing quantities of goods and services. Inflation Rate: the percentage increase in the price level from one year to the next. Gross Domestic Product(GDP): the market value of all final goods and services produced within a country during a period of time, typically one year. GDP Is Measured Using Market Values, Not Quantities The word value is important in the definition of GDP. Measuring Total Production: GDP GDP includes only the market value of the final goods Final good or service: a good or service purchased by a final user Intermediate good or service: a good or service that is an input into another good or service, like. Tire on a truck. GDP only includes current production GDP includes only production that takes place during the indicated time period. Production, Income, and the Circular Flow Diagram Transfer Payments: payments by the government to individuals for witch the government does not receive a new good or service in return. Real GDP: the value of final goods and services evaluated at base year prices. Nominal GDP: the final value of goods and services evaluated at current-year prices. Price Level: a measure of the average prices of goods and services in the economy. GDP Deflator: a measure of the price level, calculated by dividing nominal GDP by real GDP and multiplying by 100.