EC140 Lecture Notes - Lecture 3: Counting Measure, Environmental Quality, Gdp Deflator
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EC140 Full Course Notes
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Ec 140- lecture 3: measuring national income; chapter 20. Gdp is total production in a country. If a production was sold and consumer, gdp would be easy to measure. Outputs of one company are inputs to another. Measuring value of output counts some output more than once. To avoid double counting- measure value added by all firms. Value added is sales revenue- cost of intermediate goods. Value added is definitionally equal to wages paid to workers plus profits paid to owners. Total value added in the economy is a measure of total output. Gdp is the total value of final goods and services produced. Wide range of approaches to measuring gdp: value of final goods and services produced, value added by all firms in the economy, value of expenditure on output. Production, expenditure and income are all equal by definition. Consumption expenditure: goods and services sold to final users. Investment expenditure: goods not for current consumption.