ECN 204 Chapter Notes - Chapter 5: Intermediate Good, Final Good, Seasonal Adjustment

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Gross domestic product (gdp): measures the total income of a nation. Gdp measures two things at once: the total income of everyone in the economy and the total expenditure on the economy"s outputs of goods and services. For economy as a whole, income = expenditure; this is because every transaction has a buyer and a seller, every dollar of spending by some buyer is a dollar income for some seller. Gdp text definition: is the market value of all final goods and services produced within a country in a given period of time. Compute gdp 2 ways: by adding up the total expenditure by households or by adding up the total income (wage, rent, and profit) paid by firms. Factors of production: are inputs like labor, land, capital, and natural resources. Factor payments: are payments to the factors of production (wages, rent, etc) Households: own the factors of production; sell/rent them to firms for income, buy and consume g&s.

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