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Econ 100b Lecture 2

Econ 100b Lecture 2 - Econ 100b Lecture 2 Measuring...

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Econ 100b Lecture 2 Measuring Economic Activity We need to consider the size Three different approaches 1. Product approach: the dollar amount of output produced Use GDP, for a specified time Market Value: allows adding together unlike items by valuing them at their market prices Exceptions… Some nonmarket goods and services [for instance doing your own laundry] Underground economy Imputed values for some nonmarket goods and services – for most government services, stuff we don’t really pay for but still want to count Final Goods and services: those goods and services that are not used up in the production process Intermediate goods and services are those used up in the production of other goods and services in the same period that they themselves wer produced Adding up value added works because it automatically excludes intermediate good Capital goods are used to produce other goods and are treated as final goods because they are not completely used up in the same period that they are produced, but we have to count the entire good even though we may only use a little bit of it – ex. Machines or desks Inventory investment are the amount that inventories of unsold finished goods, as goods in process, and raw materials have changed during the period—is also treated as a final good Newly produced goods and services counts only things produced in the specified period of time
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Used goods don’t get counted in current year GDP
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