{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

chapter 5 - Chapter 10/Chapter 5 Measuring national Income...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND 0 Chapter 10 / Chapter 5 Measuring national Income Gross Domestic Product (GDP) measures total income of everyone in the economy. GDP also measures total expenditure on the economy’s output of g&s. For the economy as a whole, income equals expenditure , because every dollar of expenditure by a buyer is a dollar of income for the seller. CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND 1 The Circular-Flow Diagram is a simple depiction of the macroeconomy. illustrates GDP as spending, revenue, factor payments, and income. First, some preliminaries: Factors of production are inputs like labor, land, capital, and natural resources. Factor payments are payments to the factors of production. ( e.g ., wages, rent) CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND 2 FIGURE 1: The Circular-Flow Diagram Markets for Factors of Production Households Firms Income (=GDP) Wages, rent, profit (=GDP) Factors of production Labor, land, capital Spending (=GDP) G & S bought G & S sold Revenue (=GDP) Markets for Goods & Services
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon