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Study Guide

[ECON 111] - Final Exam Guide - Comprehensive Notes for the exam (114 pages long!)


Department
Economics
Course Code
ECON 111
Professor
Gamini
Study Guide
Final

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University of Auckland
ECON 111
FINAL EXAM
STUDY GUIDE

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LITTLE NOTABLES EXCLUSIVE WESLEY HARFIELD
Measuring a nations income
Gross domestic product
GDP is a measure of income and expenditure of an economy
It’s the total aket alue of all fial g/s podued ithi a out i a gie peiod of tie
GDP does not include intermediate goods (raw materials) or second hand goods
Double counting can occur with intermediate and second hand goods
GDP includes intangible goods and intangible services
It only includes g/s currently produced not transactions involving goods produced in the past
It measures the value of production within the geographic confines of a country
It measures the value of production that take place within a specific time interval
(year/quarter)
GDP does’t ilude a illegal tasatios
The GDP statistic is always understated because of the black economy
4-sector circular flow diagram
Y = C + I + G + NX
Ti= Indirect tax (GST)
Yd = Disposable income (Yd = Y Td)
Td = Direct tax
Tp = Transfer payment (welfare)
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LITTLE NOTABLES EXCLUSIVE WESLEY HARFIELD
Leakage
Anything that leaves the circular flow
Injection
Anything that is introduced to the circular flow
Things not included in GDP
Items that are produced and consumed in the home which never enter the market place
Items produced and sold illicitly e.g. drugs
Production in other countries even if New Zealanders contributed
Excludes output produced abroad or income earned by citizens of another country
GNP
Gross national product tracks down total income of all citizens of a country
Consumption (C)
Spending by households on g/s with the exception of purchases of new housing
Investment (I)
Spending on capital equipment, inventories and structures including new housing
Government purchases (G)
Spending on g/s by govt
Does not include transfer payments because they are not made in exchange for g/s
Net exports (NX)
Exports minus imports
National foreign Income
Net factor income from overseas + net current transfers
Gross national disposable income (GNDI)
The gross national income plus current transfers from overseas
GNDI = GDP + NFI
GDP(Y) = C + I + G + NX
This is because GNDI is when NFI is added on
YD = Y + NFI
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