Chapter 14
How Economists Measure the Macroeconomy
IN THIS CHAPTER
Measuring gross domestic product: The total value of goods and services
Decomposing GDP into 
Understanding why free trade is good for you
Macroeconomics studies the economy as a whole. Seen from on high, either businesses or the government produces goods and services. Businesses produce the bulk of what people consume, but the government provides many goods and services, including public safety, national defense, and public goods such as roads and bridges. In addition, the government provides the legal structure in which businesses operate and intervenes in the economy to regulate pollution, mandate safety equipment, and redistribute income from the rich to the poor. (For more on the division of tasks between private businesses and the government, see Chapter 3.)
To study production, distribution, and consumption with any real understanding, economists must keep track of exactly how much is produced and where it all ends up. Consequently, economists have developed a huge accounting apparatus, called National Income ...
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