Econ 502 Ch 2 Notes

Econ 502 Ch 2 Notes - Macroeconomic Measurements GDP:...

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Macroeconomic Measurements GDP: Dollar Value of Goods and Services produced per unit of time within the national boundaries. GNP: Dollar Value of Goods and Services produced per unit of time by factors owned by domestic residents. National Income Identity Production = Income = Expenditure Product: Value of Output Income: Value of Inputs Expenditures: Value of Purchases
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Income and Production Production Statement (Firm) Costs Receipts Raw Materials Sales of Product Other Business Expenses (Wages, etc.) Inventory Change Business Profits Gross Value of Inputs Gross Value of Output Production Statement (GDP) Costs Receipts Other Business Expenses Sales of Product - Raw Materials Business Profits Inventory Change Value Added from Inputs Value Added to Production
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Example: Corn, Hogs, and Government Corn Producer Produces and sells $20 worth of Corn Uses NO Raw Materials Pays Workers $5 in Wages Pays $0.50 Interest on preexisting Loan Pays $1.50 in Taxes Hog Producer Produces and sells $30 worth of Bacon Buys $12 worth of needed Feed Corn Pays Workers $4 in Wages Pays $3 in Taxes Government Collects $5.5 in total Taxes Pays $5.5 Wages to Bureaucrat Employees
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Corn Producer Costs Receipts Raw Materials $0.0 Sales of Product $20.0 Wages Interest Taxes $5.0 $0.5 $1.5 Inventory Change $0.0 Business Profits $13.0 Gross Value of Inputs: $20 Gross Value of Output: $20 Corn Value Added (GDP) Expenditures Receipts Other Business Expenses $7.0 Sales of Product - Raw Materials $20.0 Business Profits Inventory Change $13.0 $0.0 Value Added from Inputs $20.0 Value Added to Production $20.0
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Hog Producer Costs Receipts Feed Corn
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Econ 502 Ch 2 Notes - Macroeconomic Measurements GDP:...

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