These 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. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Lecture!4!Outline(of(Last(Lecture((I. GDP!II. Underground!Economy!III. Nominal!GDP!IV. Real!GDP!Outline(of(Current(Lecture((II. Expenditure!and!Income!a. The!Expenditure!and!Income!Approach!!III. Investment!!IV. Circular!Flow!a. Leakages!and!Injection!(Current(Lecture(1. Expenditure!and!Income!!a. Your!expenditure!is!someone!else’s!income.!2. Expenditure!Approach:!a. GDP!=!C!+!I!+!G!+!(XPM)!i. GDP!=!Consumers!+!Investment!Goods!+!Government!Spending!+!Net!Exports/Imports!b. As!GDP!=!C!+!I!+!G!+!(XPM),!Supply!=!Demand!and!Income!=!Expenditure!c. In!Macroeconomics,!Economists!mainly!focus!on!GDP=!C!+!I!+!G!3. Investment:!The!purchase!of!new!plan ts!(factories)!an d!equ ipment!to !in crease!inventory!buildup.!4. Circular!Fl ow!Di agram!!!!!!(((Econ(104(((((11th(Edition(! !This(Circular(Flow(Diagram(was(taken(from(Goggle;(it(corresponds(exactly(to(what(was(demonstrated(in(class.!a. Leakages!(Recession):!Saving,!Imports,!Taxes!b. Injection!(Inflation):!Imports,!Exports,!Government!Expenditure!i. If!Leakages!and!Injections!are!not!equal,!it!could!either!lead!to!an!Injection!or!Recession.!!5. Income!Approach:!a.
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