Unit 3: GROSS DOMESTIC PRODUCT DISCOVERING CONNECTIONS Have you ever thought about the economic activity that goes on in an economy? Firms hire labour and use capital goods to produce goods and services. People sell their labour to earn income so they can spend on goods and services and become consumers. The government intervenes in various ways, with taxes and transfers and with ensuring the provision of nonmarket services such as health, law and order, and education. People buy goods from abroad - and firms sell some of their output overseas. Or to put it in another way, output is produced, and income is earned and spent. Is it possible to measure the overall performance of the economy? Is there such a measure? What is a key way in which the performance of an economy can be monitored?
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