Eco 372 Week 2

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ECO 372 Week 2 DQ1 How does is the difference between real GDP and nominal GDP affect you? Or if it doesn’t, why not? Which one do we use to measure growth (or shrinkage) in the economy, and why? What does a change in GDP mean to you and your family? Answer: How does the difference between real GDP and nominal GDP affect you? Or if it doesn't why not? Real GDP is the market value of all final goods and services, while nominal GDP is the measured in current dollars. I feel like it does affect me because in real GDP, since it goes off market value, can fluctuate for the reason that we talked about last week. The market is ran off of emotions even though we stated that it is not supposed too. it is also off of all FINAL products. It does not include intermediate products. It does not give me the real number of value. Nominal GDP is directly from current dollars. This is a number that is fact worth something. A number that I can work with. Which one do we use to measure growth in the economy, and why? I believe that it is nominal GDP due to the fact that it measure real numbers. For example, if we have a pizza place and in one year we sell a slice for $1/slice for a year, we sell 100 slices, we will make $100. In the next year we up the price to $1.10 and sell 100 slices, we make $110. That is growth for the company. What does a change in GDP mean to you and your family? Our GDP includes the income of foreigners working in the U.S. and foreign companies earn in the U.S. It excludes the income of U.S. citizens working abroad and profit earned by U.S. companies in foreign countries. With that said, it affect me and my family because the money has a chance to not re-enter into circulation of our country. So we are sending money out but not bringing any in.
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