ECON 203 1nd Edition Lecture 25Outline of Last Lecture I. Types of Unemploymenta. Frictionalb. Seasonalc. Structurald. CyclicalII. Natural rate of unemploymentOutline of Current LectureI. Gross Domestic Producta. Dollar valueb. Newly producedc. Domestically producedd. Final goods and servicesII. Expenditures ApproachIII. Real GDPCurrent LectureI. Gross Domestic Product-GDP-The dollar value of new, domestically produced, markettransacted goods and services purchased during a given yeara. Dollar value- has to be sold in a marketb. Newly produced- cannot be a used product for re-salec. Domestically produced- LEGALLY produced within borders, includes foreign owned production, excludes US owned companies producing goods abroadd. Final goods and services-must be the final transaction to the consumer that will use the productII. Expenditures approachGDP = P1*Q1 + P2*Q2….+ Pn*Qn Suppose in year 2012, these are all the goods and services that are included in GDP:P QG1 10 50G2 5 100These 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.G3 2 600GDP (2012)= 10*50 + 5*100 + 2*600 = 500+500+1200= $2200Suppose in year 2013, the goods and services included in GDP are:P QG1 12 50G2 8 100G3 2 600GDP (2013)= 12*50 + 8*100 + 2*600= 600+800+1200= $2600Differences in GDP from year to year can be the result of price changes, output changes, or both. The problem with GDP is that is doesn’t specify what changes. III. Real GDP- new, domestically produced, final market transacted goods and services purchased in a particular year measured/valued using standardized prices (prices from previous years)Tries to adjust for price change, inflation, or
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