ECO 2013 (McConnell v21) - Ch7 with graphic.ppt - ECO 2013 Chapter 7 Measuring domestic output and national income ECO 2013 – Chapter 7 I NATIONAL

ECO 2013 (McConnell v21) - Ch7 with graphic.ppt - ECO 2013...

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ECO 2013 Chapter 7 Measuring domestic output and national income
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FSW ECO-2013 McConnell V21 nikishin 2 ECO 2013 – Chapter 7 I. NATIONAL INCOME ACCOUNTING MEASURES THE ECONOMY'S OVERALL PERFORMANCE. NATIONAL INCOME AND PRODUCT ACCOUNTS (NIPA) FOR THE US ECONOMY is compiled by the BUREAU OF ECONOMIC ANALYSIS (BEA), an agency of the Commerce Department. It enables economists and policymakers to: ASSES THE HEALTH OF ECONOMY by comparing levels of production at regular intervals, and track the long-run course of the economy to see whether it has grown, been constant, or declined FORMULATE POLICIES that will safeguard and improve the economy's health.
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FSW ECO-2013 McConnell V21 nikishin 3 ECO 2013 – Chapter 7 II. GROSS DOMESTIC PRODUCT (GDP) Is the primary measure of the economy's performa nce seen in the ANNUAL TOTAL OUTPUT OF GOODS AND SERVICES or ECONOMY'S AGGREGATE OUTPUT. GDP or THE AGGREGATE OUTPUT is THE TOTAL MARKET VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED IN A GIVEN YEAR IN USA, regardless who the producer is (Honda produced in USA is a part of US GDP) GDP is a monetary measure; it MEASURES THE MONETARY VALUE OF THE OUTPUT that is its price.
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FSW ECO-2013 McConnell V21 nikishin 4 ECO 2013 – Chapter 7 “INTERMEDIATE GOODS” are goods and services that are purchased for resale or for further processing or manufacturing “FINAL GOODS” are goods and services that are purchased for FINAL USE by the consumer ONLY FINAL GOODS OR SERVICES ARE INCLUDED IN GDP GDP can also be measured by MEASURING AND CUMULATING only the VALUE ADDED at each stage of production
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FSW ECO-2013 McConnell V21 nikishin 5 ECO 2013 – Chapter 7 "VALUE ADDED" is the market value of a firm's output minus the value of the inputs the firm has bought from others at each stage of the production It is the difference between what a firm pays for a product and what it receives when it sells it NONPRODUCTION TRANSACTIONS are not included in GDP because they are not involved with the generation of final goods NONPRODUCTION TRANSACTIONS are of two types
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FSW ECO-2013 McConnell V21 nikishin 6 ECO 2013 – Chapter 7 FINANCIAL TRANSACTION such as public transfer payments (what government pays directly to consumers, like Soc Sec. payments) private transfer payments like gifts of money
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