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Unformatted text preview: Chapter 20- National Output and Value Added o Production occurs in stage. What is one companies final output may be anothers input. Determining the value of all goods would result in double- counting. Intermediate goods: Goods used as inputs by other producers Final goods: Goods not to be used as inputs or at least in the future period. o To avoid double counting we use Value Added: Revenue Cost of intermediate good or Value added = payments to the factors of production. Value added is the correct measure of each firms contribution to total output. All of these added together make the economys total output.- National Income Accounting: Basics o The value of domestic output is equal to the value of the expenditure on that output and is also equal to the total income claims genereaged by producing that output. o Three ways of measuring GDP Value Added Total Expenditure on final domestic output Total flow of inome o GDP from expenditure Consumption Final products of all goods and services Denoted by C a....
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This note was uploaded on 04/28/2011 for the course ECON 209 taught by Professor Mattieuprovencher during the Spring '09 term at McGill.
- Spring '09