Chp 23

 This chapter is the first chapter that deals with macroeconomics. Maccroeconomics is defined as the study of economy-widee phenomena, including inflation (rate at which prices rise), unemployment, and economic growth, or simply the study of the economy as a whole. Often times a nations overall economy can be judged by looking at the Gross Domestic Product (GDP). GDp measure the total income of everyone in the economy and the total expidenture on the economy's output of goods and services. Another definition that focuses GDP as a measure of total expenditure would be that GDP is the market value of all final goods and services produced within a country in a given period of time. For an economy as a whole, income must equal expenditure. An economy's income is the same as its expenditure because every transaction has two parties: a buyer and seller. GDP can be computed in one of two ways: by adding up the total expenditure by households or by adding up the total iincome (wages, rent, and profit) paid by firms. Measuring GDP can at times be difficult because assumptions are made, illicit items or items consume/produced at home are excluded, and GDP only includes the value of final goods. GDP (y) is divided into four components: Consumption (C), Investments (I), Goverment purchase (G), and net exports (NX): y= c + I + G + NX. Consumption is spending by households on goods and services with the exception of purchases of new housing. Investment is spending on capital equipment, inventories, and structures, including purchases of new housing.