Class Notes (806,584)
Canada (492,337)
Brock University (11,827)
Economics (195)
ECON 1P92 (60)

chapter 20

6 Pages
Unlock Document

Brock University
Marilyn Cottrell

January 1618 2012 Chapter 20 The Measurement of National IncomeNational Output and Value Added Production occurs in stagesMany firms produce outputs that are used as inputs by other firmsIntermediate goods and servicesOutputs of firms that are used as inputs by other firmsFinal productsOutputs that are not used as inputs by other firmsValue AddedMeasures each firms contribution to total outputThe amount of market value that is produced by that firmEXAMPLE Value AddedRevenueCosts of Intermediate goods and servicesCompany buys iron ore for 200 o Iron ore is the intermediate goodProduces steel that sells for 500 o Steel is the outputSteel companys value added is 500200300EXAMPLE Total value added for a product equals final selling price of productProduct Selling Price Value Added Cotton 2 2 Cloth 5 3 Shirt 20 15 Total Value Added 20Shirt sells for 20 and sum of value added 2315 equals 20 Also Value addedIncome to Factors of ProductionTotal value added in the economy is GDPMeasure of all final output that is produced in the economy valued at market prices o Adding up value added avoids double counting o Must not add up each firms outoverestimates GDPie adding up cotton plus cloth plus shirt overestimates value of productionprices of cotton and cloth are included in price of shirtNational Income Accounting The Basics Three different ways of measuring national income 1 Add up total value added from domestic production 2 Add up the total expenditure on domestic output
More Less

Related notes for ECON 1P92

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.