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Canada (158,232)
Economics (923)
ECN 204 (281)
Chapter 5

Chapter 5 - GDP.docx

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Ryerson University
ECN 204
Christos Shiamptanis

Chapter 5The Data of Microeconomics THE ECONOMY INCOME AND EXPENDITURE A person with an high income can more easily afford lifes necessities and luxurieso And enjoy a higher standard of living better food housing job cars vacationsFor an nations overall economy if the economy poor it means that the nations is producing low and also by looking that the total income that everyone is earning o Which is the task of gross domestic product GDPGDP measures the total income and total expenditureo For an economy as a whole income must equal expenditureIt is the same because every transaction as two parties a buyer and seller y If one person spends one dollar its an expenditure on one side and an income on the otherAn good example would be to use the circular flow diagram y It talks about the transactions between household and firms y Total income and expenditurewages rent and profits THE MEASUREMENT OF GROSS DOMESTIC PRODUCTGross domestic productis the market value of all final goods and services produced within a country in a given period of time o GDP adds together many different kinds of products into a single measure it uses market prices Looks at the willingness to payIf the apple are twice the price of oranges the apple contributes twice as much GDP as does an orange o It includes all the products that were sold in the economy o There are some products that GDP excludes because measuring then is so difficultMost items produced and sold illicitly such as illegal drugs produced and consumed at home and because the fact they never
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