ECON 1202 Lecture Notes - Lecture 5: Gross National Product, Exim, Intermediate Good
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ECON 1202 Full Course Notes
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Gross domestic product(gdp)- value of all final goods and services produced within the domestic territory of a country in a given period of time, usually a financial year. 3 ways to calculate gdp: value added method, income method, expenditure method. Intermediate goods can be counted as raw materials. Intermediate value is deducted from final value to avoid double counting. Capital goods- used together with intermediate goods to produce final good. Capital goods can be used over and over again but they are subjected to depreciation. Value added= value of final good- value of intermediate good. Consumption can be split into two parts: durable consumption expenditure, non-durable consumption expenditure. Investment expenditure can be split into 3 parts: residential, non-residential, inventory, planned, unplanned. Investment is the addition to the stock of existing capital. S= delta = rate of depreciation of capital. Expenditure of governments: subsidies to firms, social security payments to household.