101-2010-L4

101-2010-L4 - Econ 101 Lecture 3 Measurement of Economic...

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Unformatted text preview: Econ 101 Lecture 3 Measurement of Economic Activities How is GDP actually measured? By Expenditures Add the spending of all different sectors in the economy By Income Add the income of all factors in production By Production Add the value of production of all businesses All three ways are equivalent! All three approaches give the same measure of GDP! Product = Expenditure = Income 1. GDP by Expenditures GDP = total spending on all final goods and services Consumers .... Private consumption C Firms .............. Private Investment I Government ... Government Expenditures G Foreigners …… Exports X (minus) ……….. Imports M GDP = C + I + G + X - M 1. GDP by Expenditures Where to find data? http://bea.gov/ One can measure both Nominal and Real GDP by Expenditures For Real GDP, GDP=C+I+G+X-M only holds approximately 1. GDP by Expenditures Consumption Anything that, once enjoyed today, cannot be enjoyed tomorrow In our models, households get utility from consumption In NIPA accounts, Consumption is divided into consumption of Durables Nondurables Services 1. GDP by Expenditures Consumption About 60% on average...
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101-2010-L4 - Econ 101 Lecture 3 Measurement of Economic...

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