ECON 291 Chapter : Chapeter 2 - Measurement and Accounting
20 Oct 2011
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Econ291 chapter 2: measurement and accounting. The national income accounts are an accounting framework used to measure current economic activity. Income approach measures economic activity by calculating the total income received: wages: salary, bonuses, commissions, taxes: income, consumption (gst), profit, after tax profits. Expenditure approach measures economic activity by adding the total amounts spent by all final consumers (including firms, government, and individuals) Total production = total income = total expenditure. Gross domestic product (gdp) is the market value of all final goods and services. Newly" produced within a nation during a fixed period of time. Normally, one is most interested in annual gdp or quarterly gdp. Newly produced goods are goods that are sold (provided) in the given time period. Market value: goods and services are counted in gdp at their market values (or price at which they are sold). By counting gdp in dollars one takes into account the relative economic value of different goods.
