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Chapter 4 Measuring A Nations Income
Chapter 4 Measuring A Nations Income
MARKETS
Revenue FOR Spending
GOODS AND SERVICES
•Firms sell Goods and
Goods
•Households buy services
and services
sold bought
FIRMS HOUSEHOLDS
•Produce and sell •Buy and consume
goods and services goods and services
•Hire and use factors •Own and sell factors
of production of production
Y = C + I + G + NX
Consumption, C Investment, I
Government purchases, G Net exports, NX
N o m in a l G D P
G D P d e fla to r = 100
R eal G D P
N o m in a l G D P 20X X
R e a l G D P20X X 100
G D P d e f la to r2 0 X X
5000
4000
3000
2000
1000
0
1980 1985 1990 1995 2000 2005 2010
Year