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[Economics 1022A/B] - Midterm Exam Guide - Comprehensive Notes for the exam (41 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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GDP is the market value of all the final goods and services produced within a country in a given time period
A final good/service is an item that is bought by its final user during a specified time period
An intermediate good/service is an item that is produced by one firm, bought by another firm, and used as a component of
a final good or service
Firms
Households
Rest of the World
The economy consists of:
Goods markets (goods and services)
Factors markets (productive resources)
Aggregate Economic Markets are:
Y = Income
C = Consumption Expenditure
I = Investment
G = Government Expenditure
X = Exports, M = Imports
NX (Net Exports) = X - M
Define the following:
Let's summarize what the circular flow diagram tells us.
Sell factor services to firms and receive incomes = Y
Spend C on goods and services
Households:
Spend G on goods and services
Governments:
Spend NX (Net exports) on goods and services
The Rest of the World:
Buy the services of factors of production from households and pay incomes Y
Produce goods and services, which they sell to households, C, governments, G, other firms (and themselves), I, and
the rest of the world, NX.
Y = C + I + G + NX
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Firms:
Gross Domestic Product:
Expenditure Approach
Statistics Canada measures Canada's GDP in two ways:
Measuring Canada's GDP:
Lecture 1 - Chapter 20: Measuring GDP and Economic
Growth
December 27, 2016
11:23 AM
Lecture Notes Page 1
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Expenditure Approach
Income Approach
Y = C + I + G + X - M
Expenditure Approach:
Table 20.1 on P.469 shows Canada's GDP using the expenditure in 2013
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Sums incomes paid by firms to households
Wages, salaries, and supplementary labour income + Other factor incomes = Net domestic income at factor cost
Net domestic income at factor cost + Indirect taxes - subsidies = net domestic income at market prices
Net domestic income at market prices + depreciation = GDP (income approach)
GDP (Income Approach) + Statistical Discrepancy = GDP (Expenditure Approach)
Income Approach:
Table 20.2 on P. 470 shows Canada's GDP using the income approach in 2013
We produced more goods and services in 2015 than in 2014
We paid higher prices for our goods and services in 2015 than we paid in 2014
Because GDP in 2015 was greater than in 2014, we know that one or two things must have happened during 2015:
Economists at Statistics Canada split GDP into two parts
Nominal GDP and Real GDP:
Lecture Notes Page 2
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