Another look at each market: Goods markets

• Besides looking at each agent separately, we can take a closer look at each market.

• The most interesting market is the Goods and Services Markets, which I usually just call the Goods market.

• The total value of all goods produced each year is called GDP.

• This GDP can be computed by adding together all of the spending on the goods. This leads to the GDP = C+I+G+(X-M) relationship. This is a critical relationship that you should commit to memory.

• At any point in time, this relationship MUST be true.This means that if you are given values for five of these six variables, you can calculate the other.