CN_EC140_09_public_20

CN_EC140_09_public_20 - MeasurementofNational Income...

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Measurement of National  Income Chapter 20
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Christine Neill, January 2009 Measurement of National Income (Ch  20) Introduction The Value-Added Approach The Expenditure Approach The Income Approach Other definitions GDP per capita Real GDP GNP Personal Disposable Income How useful is GDP?
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Christine Neill, January 2009 Introduction Want to measure the economy’s total output. Total output is value of all final products produced in a given time period Don’t want to double count the value of goods that are included as parts of other goods – ie intermediate goods So: only count value added in production of each good Value added = Total revenue – cost of intermediate inputs
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Christine Neill, January 2009 Value added – an example Stage of production Selling price Value Added 1. Farmer (wheat) $0.30 2. Milling (flour) $0.55 3. Bakery (bread) $0.9 4. Retailer (sale of bread) $1.00 5. Total
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Christine Neill, January 2009 Introduction Main concept is GDP: the value of all the final, marketed, newly produced goods and services produced within a country’s geographical boundaries during a specified period of time Have three options to measure GDP that all theoretically give the same result: Production (value added) Expenditure Income
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Christine Neill, January 2009 The Circular Flow Domestic Households Financial System Government Domestic producers Income Tax Saving Imports Foreign Countries Exports Gov purchases Investment C o n s u m p t i Adapted from Ragan/Lipsey, Fig 20-1
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GDP - Expenditure Y = C + I + G + (X – IM) Consumption (C a ) Household spending on all goods and services produced in a year Includes services, non-durable goods, and durable goods Investment (I a ) Spending by firms on plant and equipment, inventories, and residential construction. Not for present consumption
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This note was uploaded on 12/12/2011 for the course ECON 101 taught by Professor Bi during the Spring '11 term at York University.

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CN_EC140_09_public_20 - MeasurementofNational Income...

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