GDP approaches - Click to edit Master subtitle style Topic...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon

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

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

Unformatted text preview: Click to edit Master subtitle style Topic 4: Different approaches to GDP PRINCIPLES OF MACROECONOMICS Dr. Fidel Gonzalez Department of Economics and Intl. Business Sam Houston State University Click to edit Master subtitle style Three different approaches to measure the GDP The production of an economy is measured by the GDP. There are three ways to calculate it: 1) Spending approach. 2) Value added approach. 3) Income approach. 1) Spending approach: we look at the spending patterns of households, firm and the government (we covered this before). Y = C + I + G + NX If a household buys a good or services to consume it, it is considered part of C. If a firm or the government or a firm buys machinery, equipments, software, etc, (including changes in inventories) it is considered investment, I. The payments of the local, state and federal government to professors, national guard, etc. is considered government expenditures, G The goods and services sold and bought abroad are considered NX. In this approach we care who buys the good or service and for what purpose. 2) Value added: we measured how much value was added in the different stages of production. The sum of the value added in each stage of production for all goods is equal to the GDP....
View Full Document

This note was uploaded on 06/06/2011 for the course ECON 233 taught by Professor Fidel during the Fall '10 term at Sam Houston State University.

Page1 / 11

GDP approaches - Click to edit Master subtitle style Topic...

This preview shows document pages 1 - 5. Sign up to view the full document.

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