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ECON 1010 Lecture Notes - Lecture 1: Business Cycle, Net Domestic Product, Gross Domestic Product

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School
York University
Department
Economics
Course
ECON 1010
Professor
Ardeshir Noordeh

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Document Summary

Chapter 20 : measuring gdp and economic growth. Is the market value of all nal goods and service produced in a country in a given time period. Also represents the employment tin the country. Gap measure the value of production which also equals total expenditure on nal goods and total income. The equality of income and value of production shows the line between the level of production an living standards. Living standard: how much we can consume, the more we consume, the better we are. Export is always a plus, import is always a minus. Income is going to ow from rms to the households. Households are the owners of the factors of productions. 4 major factors of productions: labour, land, capital (tools), entrepreneur each earn income. House holds don"t spend on investments aside from houses, rms do spend money on investments. And then net value = which is exports minus imports.

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Related Questions

What is the market for factors of production?

  1. What is the market for factors of production?

    1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages. 

  2. What is the money market?

    1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.

  3. Who are the three economic actors in the circular flow model?

    1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.

  4. How is the national income of an economy determined?

    1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.

  5. What is GDP?

    1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

1.
What is an accounting identity?
A. It is a statement that by definition must be true
B. It is an equality that must be true regardless of the value of its variables.
C. It is a technique accountants employ in the preparation of income statements.
D. All of the above.
E. A and B only.

The account identity that is used to estimate the gross domestic product of a country is given by
A. Income = Production - Comsumption
B. Consumption = Income - Saving
C. Production = Expenditrue = Consumption
D. Production = Expenditure = income

2.
What important factors do GDP estimates leave out? (check all that apply)
A. Leisure
B. The value of intermediate goods.
C. Home production.
D. The production of illegal professions.
E. Capital depreciation.

3.
Which of the following news stroies (all published in early 2014) would typically be studied in macroeconomics? (Select all that apply)
A. "5 Reasons Why Apple is Looking Like the Next Sony"
B. "Expectations High for March Employment"
C. "We Believe Inflation Should Rule Monetary Policy."
D. "Which College-and Which Major-Will Make You Richest"
E. "What If Economic Growth Is No Longer Possible?"

4.
Why is it essential to differentiate between real and nominal growth rates of GDP?
A. The nominal growth rate is more informative than the real growth rate since it is broader in the sense that it captures both price and output changes.
B. The nominal growth rate combines the effect of price changes along with changes in the production of goods and services and thus gives a less clear indication of the impact on living standards
C. It is the real growth rate that is meaningful since it indicates the change in the production of goods and services, a very significant source of improved living standards.
D. All of the above.
E. B and C only.

1.
What is an accounting identity?
A. It is a statement that by definition must be true
B. It is an equality that must be true regardless of the value of its variables.
C. It is a technique accountants employ in the preparation of income statements.
D. All of the above.
E. A and B only.

The account identity that is used to estimate the gross domestic product of a country is given by
A. Income = Production - Comsumption
B. Consumption = Income - Saving
C. Production = Expenditrue = Consumption
D. Production = Expenditure = income

2.
What important factors do GDP estimates leave out? (check all that apply)
A. Leisure
B. The value of intermediate goods.
C. Home production.
D. The production of illegal professions.
E. Capital depreciation.

3.
Which of the following news stroies (all published in early 2014) would typically be studied in macroeconomics? (Select all that apply)
A. "5 Reasons Why Apple is Looking Like the Next Sony"
B. "Expectations High for March Employment"
C. "We Believe Inflation Should Rule Monetary Policy."
D. "Which College-and Which Major-Will Make You Richest"
E. "What If Economic Growth Is No Longer Possible?"

4.
Why is it essential to differentiate between real and nominal growth rates of GDP?
A. The nominal growth rate is more informative than the real growth rate since it is broader in the sense that it captures both price and output changes.
B. The nominal growth rate combines the effect of price changes along with changes in the production of goods and services and thus gives a less clear indication of the impact on living standards
C. It is the real growth rate that is meaningful since it indicates the change in the production of goods and services, a very significant source of improved living standards.
D. All of the above.
E. B and C only.