ECO 1102 Lecture Notes - Lecture 2: Gross Domestic Product, Intermediate Good
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ECO 1102 Full Course Notes
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For an economy as a whole, income must equal expenditure. If there"s a seller, there must be a buyer: balance the economy. Refer to figure 5. 1: the circular-flow diagram (households to markets for g&s to firms to markets for factors of production to households . ) Gross domestic product (gdp): measures the total income of a nation, most closely watched economic stat because it"s the best measure of a society"s economic well-being. Gdp: the market value of all final goods and services produced within a country in a given period of time. Gdp adds together many different kinds of products into a single measure of the value of economic activity (can"t add apples and oranges but can add value of them), uses market prices. Gdp includes all items produced in the market economy and sold legally in markets, also includes the market value of the housing services provided by the economy"s stock of housing.