EC140 Lecture Notes - Lecture 2: Counting Measure, Gdp Deflator, Environmental Quality
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Chapter 20: measuring naional income jan. 7, 2016. If all producion was sold and consumed, gdp would be easy to measure. Outputs of one company are inputs to another. Measure value of output counts some output more than one. 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 proits paid to owners. Total value added is a measure of total output. Gdp is the total value of inal goods and services produced. Equals the value of expenditure on output. Also equals the income generated by producing that output. Producion, expenditure and income are all equal by deiniion. Consumpion expenditure: goods and services sold to inal users. Investment expenditure: goods not for current consumpion, inventory, plant/equipment, housing. Government purchases: current expenditure, government investment. Net exports: total exports minus total imports, count goods and services.