Chapter 10 Powerpoint

Chapter 10 Powerpoint - Measuring a Nations Income Data...

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Measuring a Nation’s Income Data Economic activity Gross Domestic Product (GDP) Chapter 10
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The whole Economy’s Income and Expenditure When judging whether the economy is doing well or poorly, it is natural to look at the total income that everyone in the economy is earning because it represents economy’s total activity.
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The Economy’s Income and Expenditure For an economy as a whole, income must equal expenditure (= spending), firms’ revenue, and sum of wage, rent, and profit because: Every transaction has a buyer and a seller. Every dollar of spending by some buyer is a dollar of income for some seller.
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The Circular-Flow Diagram The equality of income and expenditure can be illustrated with the circular-flow diagram .
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The Circular-Flow Diagram Firms Households Market for Factors of Production Market for Goods and Services Spending = expenditure Revenue Wages, rent, and profit Income Goods & Services sold Goods & Services bought Labor, land, and capital Inputs for production
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The Circular-Flow Diagram Different name but the same money Firms Households Market for Factors of Production Market for Goods and Services Spending = GDP Revenue = GDP Wages, rent, and profit = GDP Income = GDP Goods & Services sold Goods & Services bought Labor, land, and capital Inputs for production 1 2 3 4
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Gross domestic product (GDP) is a measure of the income and expenditures of an economy. It is the total market value of all final goods and services produced within a country in a given period of time. The easiest way to measure GDP (1 arrow) Gross Domestic Product
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The Definition of GDP** GDP is the market value of all final goods and services produced within a country in a given period of time.
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The Measurement of GDP Output is valued at market prices . It records only the value of final goods , not intermediate goods (the value is counted only once). (ex) wine & grape It includes both tangible goods (food, clothing, cars) and intangible services (haircuts, housecleaning, doctor visits).
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The Measurement of GDP It includes goods and services currently produced , not transactions involving
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This note was uploaded on 11/16/2011 for the course ECON 202 taught by Professor Kim during the Fall '11 term at CSU Fullerton.

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Chapter 10 Powerpoint - Measuring a Nations Income Data...

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