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[Economics 1022A/B] - Midterm Exam Guide - Comprehensive Notes for the exam (16 pages long!)


Department
Economics
Course Code
ECON 1022A/B
Professor
Jeannie Gillmore
Study Guide
Midterm

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Western
Economics 1022A/B
MIDTERM EXAM
STUDY GUIDE

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Chapter 20. Measuring GDP and Economic Growth
GROSS DOMESTIC PRODUCT
- GDP is the market value of the final goods and services produced within a
country in a given time period
· Market value = the prices at which items are traded in markets
· Final good = an item bought by its final user during a specified time period
· Intermediate good = an item produced by one firm, bought by another,
and used as a component of a final good or service
THE CIRCULAR FLOW OF EXPENDITURE
- The economy consists of:
· Households
Sell factor services (labour, land, etc.) to firms and receive income = Y
Buy consumer goods and services consumer expenditure = C
· Governments
Buy goods and services from firms government expenditure = G
Financial transfers and taxes are not part of the circular flow
· Rest of the world
Firms buy and sell goods to the rest of the world
Net exports NX = exports imports = X-M
· Firms
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Buy services of factors of production from households and pay income
Y
Produce goods and services that are sold to households C,
governments G, the rest of the world NX, and make investments I
- GDP = Aggregate expenditure = Aggregate Income
C + I + G + NX = Y
- Gross means before subtracting the depreciation of capital
- Depreciation = Gross investment Net investment
MEASURING CANADAS GDP
1. The Expenditure Approach: GDP = C + I + G + (X M)
2. The Income Approach
Blue is aggregate income
Red is aggregate
expenditure
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