ECN 211 L9 NIA_BB

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Unformatted text preview: Click to edit Master subtitle style 9/19/11 9/19/11 11 ECN 211 Macroeconomic Principles L9: National Income Accounting 9/19/11 9/19/11 22 National Income and Product Accounting (NIPA) seeks to measure ____________ of an entire economy as well as flows between sectors How can we measure total output of the US economy? 9/19/11 9/19/11 33 Circular Flow and NIPA Three ways to measure total value of output: Outputs What is produced Expenditures What is spent Incomes What is earned. By definition: Income = expenditure = value of output 9/19/11 9/19/11 44 Gross Domestic Product (GDP) the market value of all final goods and services produced in an economy within a year Three aspects to note: Market Value Final Goods and Services Not all goods 9/19/11 9/19/11 55 GDP A larger GDP (usually) means that we have more goods and services that can be used to satisfy our unlimited wants and needs The PPC has shifted outwards How big is US GDP? 9/19/11 9/19/11 66 US GDP 2 4 6 8 10 12 9/19/11 9/19/11 77 Market Value Most activities (outputs) not traded in a market are not included in GDP Its value cannot be measured accurately though it is productive Thus GDP is an underestimate of economic activity Examples: Housework Illegal activities Barter trades Typically GDP is a larger under-estimate of economic activity for 9/19/11 9/19/11 88 Final Goods and Services Only goods and services bought by the final consumer Dont count intermediate goods to avoid double counting 9/19/11...
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ECN 211 L9 NIA_BB - Click to edit Master subtitle style...

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