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ECN 204 (281)
Chapter 5

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Ryerson University
ECN 204
Christos Shiamptanis

Chapter 5 Measuring a Nations Income Microeconomicshow individual households and firms make decisions and hw they interact with another in mkts Macroeconomicsstudy of the ecn as a whole ecn changes that affect many households firms and mkts simultaneouslygross domestic product GDPtotal income of a nations best measure of a societys ecn well being The Economys Income and ExpenditureGDPmeasures 1 total income of everyone in ecn 2 total expenditure on ecn output of goods and servicesfor ecn as whole income mustexp o ecn income is same as its exp bc every dollar of spending by some buyer is a dollar of income for some sellercompute GDPadding up total exp by households or by adding up the total income wages rent and profit paid by firms The Measurement of Gross Domestic ProductGross domestic productmkt val of all final goods services produced win a country in a given period of time GDP is the Market Valuemarket pricesmeaure the amt ppl are willing to pay for diff goods they reflect the val of those goodsex price of an orange apple contributes 2X as much to GDP than orange Of AllGDPall items produced in the ecn and sold legally in mkts o ex rentboth tenants exp and the landlords incomeowner pay rent to himself so the rent is included in both his exp and incomeGDPexcludes items produced sold illictly illegal drugs and item produced and consumed at home vegetables you grow marriageb4 mowing lawn is service but not now underestim true amt of productive activity taking place Finalintermediate goodex paperfinal goodex cardGDP inclu only val of final goods intermediate goods already inclu in the prices of the final goods
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