MGEA06H3 Lecture 1: GDP

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Gross domestic product ( gdp) can be measured in three different ways: value added approach, expenditure approach, income approach. It doesn"t matter which approach we use, if we do it right, we always get the same answer. There are some limitations in measuring gdp as we don"t consider black market economy or household production. Macro looks at the big picture as oppose to micro which looks at the behaviour or decision making by a group of individuals. Macro is interested in all regions in the economy. How different sector interact with each other un different markets. In macro we don"t just add things up, we take into account that how my actions will make an impact on you. Circular flow of diagram is given in the textbook, figure 7. 1. Four major sectors for us to look at: government ( federal, municipal and provincial, household, firms, rest of the world. We interact with each other in different manners.

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