ECON 295 Lecture Notes - Lecture 2: Frictional Unemployment, Potential Output, Output Gap
17 Apr 2017
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Macroeconomics policy lecture 2: chapter 19. National product (output) is the most comprehensive measure of nation"s overall level of economic activity. Example: if a firm produces worth of ice cream, that ultimately represents income for the firm"s workers, the firm"s suppliers of material inputs, and the firm owners. To measure total output in dollars, we add up the values of the many different goods produced. If nominal gdp increases, it doesn"t mean output increased. One of the most commonly used measures of national income is called gross domestic product (gdp) Real gdp measures the quantity of total output produced by the nation"s economy over the period of a year. Real gdp fluctuates around a rising trend: the trend shows long-run economic growth, the short-run fluctuations show the business cycle. Potential output: what the economy could produce if all resources were employed at their normal levels of utilization (full-employment output)
