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AGGREGATE OUTPUT: The macroeconomy's total production of final goods and services. You might recognized it by it's official term gross domestic product. Another related term is aggregate supply. This is the total production in the economy that is purchased by the four basic economic sectors -- household, business, government, and foreign. See also aggregate market, aggregate demand, aggregate expenditures.
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Lesson 10: Gross Domestic Product | Unit 2: Looking Behind GDP
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Page: 12 of 25
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GDP is the total MARKET VALUE of current economic production, that is, GDP measures current production at current market prices.- If we measure current economic production, current prices work fine. If we compare GDP from one year to the next year, current prices can be misleading.
- For example... a 10% increase in GDP could result from changes in production, prices, or both. Production could be 10% higher will prices do not change. Or prices could 10% higher while production does not change. Or this could be a mix of changes in production and prices.
- All we know is that GDP has risen by 10%, but it is difficult to know what has happened to physical production.
We need something more, we need real GDP.
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OPPORTUNITY COST, PRODUCTION POSSIBILITIES The production possibilities analysis, which is the alternative combinations of two goods that an economy can produce with given resources and technology, can be used to illustrate opportunity cost--the highest valued alternative foregone in the pursuit of an activity.
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Junk bonds are so called because they have a better than 50% chance of default, carrying a Standard & Poor's rating of CC or lower.
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"You don't have to be a fantastic hero to do certain things - to compete. You can be just an ordinary chap, sufficiently motivated to reach challenging goals." -- Sir Edmund Hillary, Explorer
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JLE
Journal of Law and Economics
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