ECON 102 Lecture Notes - Lecture 6: Gross Domestic Product, Producer Price Index, Market Basket

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5 Feb 2017
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Lecture 6:
NIPA: National income and product accounts: measures the flows of money within an
ecooy to kow the size, copare ecooies’ perforaces to each other ad to
themselves
Think about what is moving in the opposite direction of the arrows
3 ways to calculate total economic activity:
1. Gross Domestic Product (GDP): the value of final goods ( the value of all production)
produced withi the coutry Priary defiitio of ecooy’s size
2. Aggregate expenditure: all flows into the market for goods and services within a country
3. National income: total payments to factors of production within the country: payments to
labor, capital and land)
o By definition 1 = 2
Aggregate expenditure identity: describes spending on domestically produced goods and
services
nGDP = C + I + G + NX
o measures economic value using current price
o C= consumption/ household expenditure on goods and services domestically and foreign
o I= investment/ firm expenditure on domestically and foreign produced resources
o G= government expenditure
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