ECO1011S Week 1 Day 3 - Key economic people 1 GDP equals...

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Key economic people… 1
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GDP equals Expenditure equals Income Total expenditure - aggregate expenditure (AE) AE = consumption exp + investment + govt exp + net exports Aggregate Income (Y) earned from producing g&s is equal to total amt paid for FoPs used Wages, interest, rent and profit Y = AE Y = C + I + G + X – M GDP = AE = Y
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Measuring national output We can measure national output using three approaches: Production method (Value added) Expenditure Method (Final goods and services) Income method (Income of FoPs) 3 Focus on each method in turn Note that all three approaches will produce the same estimates of national output When we talk about national income and national output, they are the same thing!
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Measuring national output Consider the production process for clothing in the diagram below: NO: this would result in double-counting and would overstate national output Can we count the outputs of production in each phase to calculate GDP?
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