Chapter 10 Measuring a nation's income

Chapter 10 Measuring a nation's income - Chapter 10...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 Measuring a Nation’s Income The Economy’s income and expenditure. GDP= Gross domestic product - measures both total expenditure and t otal income at the same time. - because for an economy as a whole, income must equal expenditure. - GDP is computed as either the sum of total expenditure by households or the sum of total in- come paid by firms. - because all expenditure in the economy ends up as someone’s income, GDP is the same regard- less of how we compute it. The measurement of GDP “GDP is the market value of all final goods and services produced within a country in a given period of time.” -market value=>GDP measures the value of economic activity using market price , which meas- ures the amount people are WTP for different goods thus reflecting the value of those goods. -of all=>all legal goods, and must be sold in to the market.(Homegrown does not count.) -final=>does not include goods that are used to make other goods ( intermediate goods ), this is because the value of intermediate goods is already included in the prices of the final goods. However intermediate goods that are not used but added to the inventory
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Chapter 10 Measuring a nation's income - Chapter 10...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online