EC140 Lecture Notes - Lecture 2: Retained Earnings, Gdp Deflator, Gross Domestic Product
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EC140 Full Course Notes
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Real gdp measures the quanity of total output produced by the naion"s steady economy during a year. Understand how measuring value added eliminates double couning. Explain the income and expenditure approaches to measuring naional income. Understand the diference between real and nominal gdp. Understand the relevance of gdp per capita. Gdp is total producion in a country. If all producion was sold and consumed, 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 couning measure value added by all irms. Value added is sales revenue cost of intermediate goods. Value added is equal to wages paid to workers plus proit paid to owners. Total value added is a measure of total output. Gdp is the total value of inal goods and services produced. Also equals the income generated by producing that output. Producion, expenditure and income are all equal by deiniion.
