Chapter 6

Chapter 6 - Chapter 6: Macroeconomic Measurements Gross...

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Unformatted text preview: Chapter 6: Macroeconomic Measurements Gross Domestic Product = the total market value of all final goods and services produced annually within a countrys borders. Three approaches to computing GDP:- Expenditure approach o Add money spent by buyers on final goods and service Final good = good in the hands of the final user Intermediate good = an input in the production of a final good Double counting = counting a good more than once when computing GDP- Income approach o Find the sum of all wages and profits- Value-added approach o Value added = the dollar value contributed to a final good at each stage of production; difference between the output and the iintermediate good What GDP Omits- Certain nonmarket goods and services- Underground activities, both legal and illegal o No record exists of these transactions- Sale of Used Goods- Financial transactions o Trading of stocks and bonds not counted - Government Transfer Payments o Transfer payment = payment to the person that is not made in return for goods and services currently supplied...
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This note was uploaded on 04/16/2008 for the course EB 011 taught by Professor Noell during the Spring '08 term at Westmont.

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Chapter 6 - Chapter 6: Macroeconomic Measurements Gross...

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