02.ECON202 Jan 6 2011

02.ECON202 Jan 6 2011 - Gross domestic Product (GDP) the...

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

View Full Document Right Arrow Icon
Gross domestic Product (GDP) – the value of final foods and services produced within an economy in a given time period. Income Approach, Expenditure Approach, and the Circular Flow - total expenditure on domestically- produced final foods and services - Total incomes earned by domestically located factors of production Expenditure equals income because every dollar spend by a buyer becomes income to the seller The Circular Flow Labour Household Firms Goods The money flow Income Household Firms Expenditure Definition: A firm’s value added is the value of its output minus the value of the intermediate goods the firm used to product that output Example - A farmer grows a bushedl of wheat and sells it to a miller for $1.00 - The miller turns the wheat into flour and sells it to a baker for $3.00 - The baker uses the flours to make a loaf of bread and sells it to an engineer for $6.00 - The engineer eats the bread Value Added Farmer
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

02.ECON202 Jan 6 2011 - Gross domestic Product (GDP) the...

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