Textbook Notes (368,460)
Canada (161,892)
Economics (923)
ECN 204 (282)
Amy Peng (21)
Chapter 5

ECN 204 Chapter 5 Notes.docx

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Department
Economics
Course
ECN 204
Professor
Amy Peng
Semester
Winter

Description
ECN 204 Chapter 5 Notes Measuring the Economys Performance GDPNational Income Accounting are the techniques used to measure the overall production of the economy and other related variables for the nation as a whole o This helpsAsses the health of the economyTrack the longrun course of the economy growing constant or declineFormulate policies that will maintain and improve the economys healthGross Domestic Product o The total market value of all final goods and services produced annually within the boundaries of CanadaA Monetary Measure o This is what the GDP does o It is a monetary measure of a nations output o Without this we would have no way of comparing the relative values of the vast number of goods and services produced in different yearsAvoiding Multiple Counting o Intermediate Goods are goods and services that are purchased for resale or for further processing or manufacturing o Final Goods include both consumption goods and capital goods that are purchased by their final users o To include the value of intermediate goods would amount to Multiple Counting wrongly including the value of the intermediate goods in the GDP o Alternatively we could avoid multiple counting by measuring and cumulating only the value added at each stageValue Added the value of the product sold by a firm less the value of the products purchased and use by the firm to product the product Table 52GDP Excludes Nonproduction Transactions o Financial TransactionsPublic Transfer Payments social insurance payments Ex welfare and unemployment insurance Not added because they contribute nothing to current productionPrivate Transfer Payments for example money that parents give to their children for allowance They produce no output it is just a transfer of moneyStockMarket Transactions this is only swapping bits of paper o SecondHand SalesSuppose you sell your 2002 Ford Mustang to a friend this transaction would not be included in the GDP because it generates no current production
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