ECN204 Lecture 2: Measuring the Economy's Output

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Published on 14 Feb 2016
School
Ryerson University
Department
Economics
Course
ECN 204
Professor
ECN204Lecture2MeasuringtheEconomy'sOutput
MeasuringtheEconomy'sPerformance:GDP
NationalIncomeAccounting
Measureseconomy'soverallperformance
StatisticsCanadacompliesNationalIncomeandProductAccounts
Assesshealthofeconomy
Trackthelong‐runcourseoftheeconomy
Formulatepolicies
GrossDomesticProduct
Themainmeasureoftheeconomy'sperformance
Thetotal(aggregate)marketvalueofallfinalgoodsandservicesproduced
withinthebordersofacountryduringaspecificperiodoftime
Avoidingmultiplecounting
Toavoidmultiplecounting,onlyfinalgoodsandservicesarecounted
Goodsandservicespurchasedforfinaluseandnotforresaleorfurther
processingormanufacturing
Intermediategoods
Productspurchasedforresaleorforfurtherprocessingormanufacturing
GDPexcludesnonproductiontransactions
Financialtransactions
Publictransferpayments
Privatetransferpayments
Stock‐markettransactions
Second‐handsales
TwowaysofcalculatingGDP:Expendituresandincome
Theexpendituresapproach
Thesumofallthemoneyspentinbuyingfinalgoodsandservices
Byhouseholds,businesses,government,andbuyersabroad
Theincomeapproach
Theincomederivedorcreatedfromproducingfinalgoodsandservices
Paymentstothesuppliersoffactorsofproductionaswages,rent,interest,
andprofit
TheExpenditureApproach
Thesumofallthemoneyspentinbuyingfinalgoodsandservicesbyhouseholds,businesses,
government,andbuyersabroad
Addsupalltheexpendituresmadeforfinalgoodsandservices
Personalconsumptionexpenditures(C)
Grossinvestment(lg)
Allfinalpurchasesofmachinery,equipment,andtoolsbyfirms
Allconstruction
Changesininventories
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