09-nat income - National Income Accounting - 2 Lecture...

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macroS2010 Lec9-page 1 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ National Income Accounting - 2 Lecture 9-PREVIEW Dr. Jennifer P. Wissink ©2009 Jennifer P. Wissink, all rights reserved. February 22, 2010
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macroS2010 Lec9-page 2 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ GDP: Gross Domestic Product Gross domestic product (GDP) is the total “dollar” market value of all final goods and services currently produced within a given period by factors of production located within a country. About how big is it?
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macroS2010 Lec9-page 3 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ Touchstones for GDP Did it go through a market? Omit under the table illegal stuff. Omit “home” production. Was it currently produced? Omit transactions in which money or goods changes hands but in which no new goods and services are produced. Omit capital gains on resale of assets (but include the value of currently rendered services or currently produced items that were a part of the transaction). Omit transfer payments. Was it a final good? Omit intermediate goods (but you can look at these IF you are using value added summed up all along the way, rather than final good sales). Include gross investment. Include currently produced inventory. Did you chase the transaction only once? Was it produced within the borders of the country?
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value of final sale expenditure loop, 1a sum of all sales WRONG WAY sum of value added expenditure loop, 1b sum of all payments to factors of production income loop $340 $70 $70 ∑w=$188 $190 $190 ∑r=$112 $290 $30 ∑int=$30 $320 $30 ∑π=$10 $340 $20 --------- --------- --------- $340 $1210 $340
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macroS2010 Lec9-page 6 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ The Expenditure Approach to GDP The expenditure approach calculates GDP by adding together the four components of spending. In equation form: G D P C I G E X I M = + + + - ( )
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macroS2010 Lec9-page 7 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ The Expenditure Approach - Basics Personal consumption expenditures (C) household spending on consumer goods.
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This note was uploaded on 10/24/2010 for the course ECONOMICS 1120 at Cornell University (Engineering School).

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09-nat income - National Income Accounting - 2 Lecture...

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