March 17, 2018 

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NET DOMESTIC PRODUCT AND NATIONAL INCOME: Net domestic product (NDP) is the total market value of all final goods and services produced within the political boundaries of an economy during a given period of time, usually a year, after adjusting for the depreciation of capital. National income (NI) is the total income earned by the citizens of the national economy resulting from their ownership of resources used in the production of final goods and services during a given period of time, usually one year. The five main differences between net domestic product and national income are (1) indirect business taxes, (2) business transfer payments, (3) net foreign factor income, (4) government subsidies, and (5) statistical discrepancy.

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Lesson 9: Macro Basics | Unit 3: Business Cycles Page: 8 of 16

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The macroeconomy is unstable. It has periods of falling production, rising inflation, and/or high unemployment.

Business cycles are recurring expansions and contractions of the aggregate economy.

  • Expansion is a general period of increasing economic activity, or rising production, which is associated with low or falling unemployment and high or rising inflation.
  • Contraction is a general period of decreasing economic activity, or falling production, which is associated with high or rising unemployment and low or falling inflation.
Counter-cyclical policies to stabilize the business cycle:
  • During an expansion, try to cause a contraction.
  • During a contraction, try to cause an expansion.

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A curve that graphically illustrates the relation between average product and the quantity of the variable input, holding all other inputs fixed. This curve indicates the per unit output at each level of the variable input. The average product curve is one of three related curves used in the analysis of the short-run production of a firm. The other two are total product curve and marginal product curve.

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Today, you are likely to spend a great deal of time at a crowded estate auction trying to buy either a coffee cup commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki or a rechargeable battery for your cell phone. Be on the lookout for malfunctioning pocket calculators.
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The 22.6% decline in stock prices on October 19, 1987 was larger than the infamous 12.8% decline on October 29, 1929.
"If football taught me anything about business, it is that you win the game one play at a time."

-- Fran Tarkenton, Football Player

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