ECO 181 Lecture 5: Chapter 5 Measuring the Economy
Document Summary
3 measures of the macro economy: gross domestic product (gdp) measures the level of economic activity, gdp per capita (gpd/population) measures standard of living, % change in gdp measures economic growth and the state of the economics. Gdp measures two important economic values: spending - households spend money on goods and services produced by firms using income that they buy from firms. Thus gdp excludes: 1) home production 2) unreported income: 2. Goods to be excluded from gdp/ what does gdp measure: intermediate, non-market activity, imports foreign production, used, financial transportations, how is gdp measured, gdp measures both: 1) income and 2) spending. Expenditure method of computing gdp: gdp is measured by adding up all of the levels by all sectors of the economy. Four sectors: households, firms, government, international factor net exports-nx. Government spending g: these spending levels all add up to gdp (denoted y, gdp = y=c+i+g+ix.
