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Economic Growth
the ability of the economy to produce increasing quantities of goods and services
Why is economic growth important?
-to replace goods and services that have been consumed
GDP
the market value of all goods and services produced in a country's economy during period of time
How do we Measure GDP?
Aggregate Demand:
C+I+G+X-M
C+I+G+X-M
Consumption Expenditure
Investment Expenditure
Government Expenditure
Export Expenditure
Import Expenditure
What is the ideal rate of GDP Growth
3%-4% ideal rate of increase in GDP per year
What are some of the limitations of GDP?
-does not include non-market productions. e.g. veggie garden
-does not include environmental impacts
-does not include real numbers only estimates