ECON 101 Lecture Notes - Lecture 3: Market Basket, Black Market, Gdp Deflator

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violetprairie-dog514

10 Oct 2016

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Gross domestic product (gdp) the market value of final goods and services produced within a country during a specific time period, usually a year. Gdp is the most widely used indicator of economic performance. What counts towards gdp: only final goods & services. Sales at intermediate stages of production are not counted as their value is embodied within the final-user good. Including goods at intermediate stages of production would result in double counting: only transactions involving production, only production within the geographic borders of the county is counted, only those goods produced during the current period. The purchase and sale of goods produced during earlier (cid:455)ears are (cid:374)ot (cid:272)ou(cid:374)ted i(cid:374) this (cid:455)ear"s gdp. Gdp as a measure of both output and income. Gdp is a measure of both output and income. Thus there are two ways it can be measured: gdp can be derived by totaling the expenditures on final-user goods and services produced during the year.

Related Questions

Gross Domestic Product (GDP) only measures the value of marketed goods and services for a country during a given period of time.

Is the GDP measure underestimating or overestimating national production and total income in the economy? Why?

What are the limitations of the GDP in measuring total output and national welfare? What products (services) are excluded from the GDP computation?

ambergnu461

Intermediate goods are goods and services that are purchased for resale or for further processing or manufacturing. Final goods are consumer goods, capital goods, and services that are purchased by their final users, rather than for resale or for further processing or manufacturing. Including the value of intermediate goods in the measure of real GDP would amount to multiple counting, and therefore distort the value of GDP. Value added is the market value of a firm’s output less the value of the inputs the firm has bought from others.

Using the table below, calculate the total sales values, value-added, and fill in the missing boxes. The product is assembled for sale is a fancy wool suit.

Stages of Production	Sales Value of Materials or Product	Value Added
	$0
Firm A: Sheep Ranch		$120
Firm B: Wool Processor	$180
Firm C: Suit Manufacturer	$220
Firm D: Clothing Wholesaler		$50
Firm E: Retail Clothier (Market)		$80
Total Sales Value
Total Value Added

amethysttrout886

An improvement in technology causes the production possibilities frontier (PPF) to

	shift to the right.
	pivot upward.
	shift to the left.
	pivot downward.

(7)

Which of the following is not shown by the circular flow model?

	The flow of resources in one direction and money in the other
	The equality of aggregate spending and aggregate income
	The interaction of households, firms, and the government
	The total amount of goods and services the economy can produce

(8)

Gross domestic product (GDP) is defined as

	the market value of all final goods and services produced in an economy in a given period of time.
	the market value of all consumption goods and services produced in an economy in a given period of time.
	the market value of all investment goods and services produced in an economy in a given period of time.
	the real value of all investment goods and services produced in an economy in a given period of time.

(9)

Real GDP

	includes all domestic and foreign transactions.
	includes the dollar value of domestic transactions only.
	tries to isolate the effect of changing output, holding prices constant.
	measures GDP in terms of prices of goods and services produced.

(10)

When economists talk about economic growth, they are usually referring to

	the percentage change in nominal GDP.
	the percentage change in real GDP.
	the percentage change in nominal investment.
	the percentage change in real investment.

chocolateant769

ECON 101 Lecture Notes - Lecture 3: Market Basket, Black Market, Gdp Deflator

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