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ECON 1000

Ch 5 Measuring a Nations IncomeGDPMeasures total income of economy and total expenditure on output of GSIncome mustexpenditureMarket value of all final goods and services produced win a specific time 14sNo used stuffReal GDP Constant Price Current Q x Base PriceNominal GDP Current priceComponents of GDPConsumptionoSpending by HH on GSInvestmentoPurchase of goods to make goodsinventoryGovt PurchasesoSpending on localprovfed but not on govt salaries Transfer PaymentsNX oExImpGDPDNGDPRGDPInflation GDPDnewGDPDoldGDPDoldo increase formulaGNPoProd by CAD location irrelevantoIncome of pickersCAD GDPoIncome of foreign comp Fo GDPCh 6 CoLCPIOverall cost of GS bought by typical consumerBasket Proportion of baskets weightsChoose base yr and computeoPcurrentPbase100Inflation rateoCPI2CPI1CPI1 100Core inflation excludes volatile components of basketProblems Commodity sub BiasoCPI assumes fixed basketoWhat if a good is dropped in favor of a subOverstate CPIIntro Of new goodsoIncrease in value ofthat arises from introoUnmeasured quality changeHard to measure qualityQuality upup and viverGDP and CPIoGDPDOM ConsumptionoCPIALL consumptionoEx AirplaneGDP not CPIoVolkswagenCPI cars not GDP foreignGermany
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