50 000 050 flour miller 120 050 070 bakery 200 120

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Unformatted text preview: ier $0.50 $0.00 $0.50 Flour Miller $1.20 $0.50 $0.70 Bakery $2.00 $1.20 $0.80 Total Value added at each state is revenue less cost of intermediate goods. The value of the final good (loaf of bread) captures all of the intermediate goods. $2.00 Value added in bread production Firm Revenue Cost of Intermediate Goods Value Added Grain Supplier $0.50 $0.00 $0.50 Flour Miller $1.20 $0.50 $0.70 Bakery $2.00 $1.20 $0.80 Total $2.00 Sale of Final Good Value added at each state is revenue less cost of intermediate goods. Sum of all value added The value of the final good (loaf of bread) captures all of the intermediate goods. Economics 104 Measuring GDP — Production Approach 5 Statistics Canada: GDP by Industry As on previous slides: measure GDP by adding up value added in production. Measuring GDP — Expenditure Approach Statistics Canada: GDP by Income & Expenditure Goods that are produced must be purchased — measuring expenditures in the economy must tell us how much is produced. Four categories of consumers: 1. Households 2. Firms 3. Governments 4. Foreign Sector Economics 104 Main components of expenditure: – Consumption (C ) – Durable goods, semi-durable goods, non-durable goods, and services – Private Sector Investment (I ) – Non-residential structures & Equipment – Residential structures – Inventories – Government Purchases (G) – Expenditure on goods and services – Gross fixed capital formation (e.g. roads, hospitals) — or, simply Government Investment – Net Exports (NX = Exports Imports) – Exports – Imports Y = C + I + G + NX 6 Expenditure Components of GDP 2010 ($billions) Component Symbol Value ($) Share Consumption C 941.4 58% Private Sector Investment I 291.4 18% Government Purchases G 420.0 26% Net Exports NX -30.8 -2% Statistical Discrepancy Gross Domestic Product -0.5 Y Source: Bernanke et al 2012, p 104 1621.5 100% Expenditure Components of GDP Relative to 2008-09 (Average Shares 1981-2012) Source: Statistics Canada 1.25 1.20 R...
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