COMMERCE 1BA3 Lecture Notes - Lecture 5: Gross Domestic Product, Intermediate Good, Seasonal Adjustment
7 May 2016
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Document Summary
On an individual level, the amount of income a person makes is related to the amount they spend and their quality of living (cid:0) same with a country as whole. For economy as a whole income must equal expenditure. Recall: circular flow diagram (cid:0) c i rcular flow of money through economy. Therefore compute gdp in two ways: add up total expenditure by households, add up total income paid by firms. Actual economy is more complicated: households don"t spend all of income, some income goes to government as taxes, some goods and services bought by government. Gross domestic product (cid:0) the market value of all final goods and services produced within a country in a given period of time: it is important to analyze each phrase of definition. Gdp uses market prices of the many items to measure value of economic activity.
