ECON 295 Lecture 6: Econ chapter 20
3 Apr 2016
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Document Summary
Production occurs in stages most firms produce outputs that are other firms inputs. Each firms contribution to total output is its value added. Summing value added avoids the problem of double counting when measuring total output. Total value added in the economy is called gross domestic product. Because of the circular flow of income, these three measures yield the same total gdp. Consider adding up the expenditures needed to purchase the final output produced in any given year. Actual consumption expenditure includes expenditure on all final goods during the year. Actual investment expenditure is expenditure on the production of goods not for present consumption, including: Actual government purchases is the purchase of currently produced goods and services by government.
