ECON1132 Lecture Notes - Lecture 2: Net Domestic Product, Financial Statement, Weighted Arithmetic Mean
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25 Mar 2015
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The flow of goods and services -> gross domestic product (gdp) The flow of income -> national income. Gdp: measured by the flow of expenditures on goods and services (upper loop) Income: the flow of income from production (lower loop) Used to measure total output of an economic system. Definition: the money value of all goods and services produced within a year, measured as a flow of final products. Was invented to explain what moves output up or down and we need measurement to test the models. Those sold for final use, rather than for further processing prior to sale (such as automobiles to consumers, not steel or tires or glass sold to producers) Spending by consumers on goods and services to satisfy immediate wants. Measure what were put away for the future. Spending by firms on new plant or equipment, by households on new housing, also includes additions to inventories (stocks or goods produced but not yet sold)
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