L12 - ECO 100Y ECO 100Y ECO 100Y ECO 100Y Introduction to...

Info iconThis preview shows pages 1–8. 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

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: ECO 100Y ECO 100Y ECO 100Y ECO 100Y Introduction to Introduction to Introduction to Introduction to Economic Economic Economics Economics Lecture 12: Lecture 12: National Income National Income Accounting Accounting Gustavo Indart Slide 1 Accounting Accounting Gross Domestic Product Gross Domestic Product ! Gross Domestic Product (GDP) is the value of all final goods and services produced in Canada during a given goods and services produced in Canada during a given period GDP i fl f d d i i d f i ! GDP is a flow of new products during a period of time, usually one year ! We can use three different approaches to measure GDP: " prod ction approach " production approach " expenditure approach " i h Gustavo Indart Slide 2 " income approach Measuring GDP Measuring GDP ! Production Approach We can measure GDP by measuring the value added in the production of goods and services in the different industries (e.g., agriculture, mining, manufacturing, commerce, etc.) ! Expenditure Approach We can measure GDP by measuring the total expenditure on final goods and services by different groups (households business services by different groups (households, business, government, and foreigners) ! Income Approach We can measure GDP by ! Income Approach We can measure GDP by measuring the total income earned by different groups producing goods and services (wages, rents, profits, Gustavo Indart Slide 3 etc.) Flow of Expenditure and Income Flow of Expenditure and Income Flow of Expenditure and Income Flow of Expenditure and Income FACTOR MARKETS Labour, land & capital Labour, land & capital Wages rent & FIRMS HOUSEHOLDS Wages, rent & interest FIRMS Expenditures on goods & services GOODS MARKETS Goods & services Goods & services Gustavo Indart Slide 4 The Production Approach The Production Approach ! GDP is the value of final goods and services produced in Canada within a yea in Canada within a year " The emphasis on the word final (goods and services) is important in order to avoid double counting ! If we were to consider also the value of intermediate If we were to consider also the value of intermediate goods, then their values would be counted twice: " as an output of the industry producing this intermediate good " as part of the value of the final good of the industry Gustavo Indart Slide 5 that uses it as an intermediate good The Production Approach The Production Approach (contd (contd The Production Approach The Production Approach (cont d) (cont d) ! To avoid this double counting we must consider only ! To avoid this double counting we must consider only the value added in each industry or at each stage in the process of manufacturing a good ! The value added by a firm is the difference between the re en e the firm earns b selling its prod ct and the the revenue the firm earns by selling its product and the amount it pays for the product of other firms it uses as intermediate goods Gustavo Indart Slide 6 Exampl Exampl Example...
View Full Document

This note was uploaded on 08/11/2011 for the course ECON 100 taught by Professor Carr during the Summer '10 term at University of Toronto- Toronto.

Page1 / 25

L12 - ECO 100Y ECO 100Y ECO 100Y ECO 100Y Introduction to...

This preview shows document pages 1 - 8. Sign up to view the full document.

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