ECON102 Lecture 4: Wealth of NATIONS

• School: University of Alberta
• Department: Economics
• Course: ECON102
• Professor: Wong,Andrew

Document Summary

Adds up to income earned by everyone in a country. Add net exports to equate the expenditure and income approaches. Calculates the value that each transaction adds to the economy. This allows us to determine how much of the total amount paid was created at each step in the production process. Helpful in avoiding double-counting an calculating how the resale of existing goods contributes to gdp. Value added approach= expenditure approach = income approach. To see if we are getting better at producing goods and services. Does not always mean the economy is doing well. Gdp is a function of both quantity of goods and services produced and their market value. Often an increase in gdp is the result of growth in both quantity and market value. In order to use gdp to compare economic growth over time or different economies to one another, we need to know how much of the growth is attributable to each factor.