EC102-5SPRING09b - 5-1Chapter 5: Measuring a Nations...

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Unformatted text preview: 5-1Chapter 5: Measuring a Nations IncomeGross Domestic Product GDPGDP is the market value of all final goods and services produced (and income earned) within a country during a period of one year5-2oGDP is basically a production conceptoGDP is a flow variableA variable with a time dimension (such as one year)oMarket Value5-3Example:ItemPriceQuantityCDs$151000Tapes $52000Current GDP: $15*1000 + $5*2000 = $25,000Nominal GDP (current dollar GDP)Final Goods:Goods that are ready to be used by the end userIntermediate goodsInputs into the productionNot included in GDP because to include them would mean double-countingoIn the national accounts, firms and the government are the units which produce output in the domestic economyoFinal and intermediate goods and services5-4Items not included in GDP:oUsed or second hand goodsoNon-marketed goods and servicesUnderground economyoFinancial assets 5-5How Do We Actually Measure GDP? Three Methods:oValue-added (production) Approach oExpenditure Approach5-6oIncome Approach5-7Value-Added ExampleStage of ProductionValue of salesCost of intermediate productsValue added = Total value - Cost of intermediate...
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This note was uploaded on 02/11/2010 for the course ART AFM101 taught by Professor Mr.lushman during the Spring '10 term at University of Toronto- Toronto.

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EC102-5SPRING09b - 5-1Chapter 5: Measuring a Nations...

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