ECON 2000 1st Edition Lecture 24Outline of Last Lecture I. Public Choice Economicsa. Definitionb. Typesc. Elected officialsd. Bureaucrats II. Political Happeningsa. Increase importance/ influence of special interest groupsb. Log –rolling: politicians trading votesc. Inefficient and or poor out comes with voting mechanismd. WastefulOutline of Current LectureIII. National Productivitya. Monetary valueb. Final Goods and Servicesc. BoundariesIV. Gross Domestic Producta. Official measurement of a nations productivityb. Nominal GDPc. Real DDPCurrent LectureIII. National Productivitya. Monetary valuei. Defined as: Price x Quantity (at equilibrium)b. Final Goods and Servicesii. The final product, not everything that went into making the productiii. This number is only counted WITHIN the country boardersiv. Two Ways to Calculate Final G/S1. Final Sales Transactiona. Sold a pencil for $2… Count the $22. Value Added during each production statea. Value added from the graphite, the wood, and then the eraser.b. Stage 1 adds $0.20, Stage 2 adds $0.05 = $0.25These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.c. Boundariesv. If it is a US company operating in another country, it does not affect our productivityvi. If a foreign country produces in US it is considered Our productivityIV. Gross Domestic Producta. Official measurement of a nations productivityb. Nominal GDPi. Using current prices to calculate how much a nation producesii. Allows prices to fluctuatec. Real DDPiii. Uses constant prices (base year)1. Prices change from year to year from inflation2. Use a previous year for a
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