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Canada (161,762)
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ECN 204 (282)
Chapter 5

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ECN 204
Christos Shiamptanis

ECN204Chapter 5Micro vs MacrooMicroeconomics the study of how individual households and firms make decisions interact with one another in marketsoMacroeconomics the study of the economy as a wholeIncome and ExpendituresoGross Domestic Product GDP measures total income of everyone in the economyoGDP also measures total expenditure on the economys output of goods and servicesoFor the economy as a whole IncomeExpenditure because every dollar a buyer spends is a dollar of income for the sellerThe CircularFlow DiagramoIt is a simple depiction of the macroeconomyoIt illustrates GDP as spending revenue factor payments and incomeoPreliminariesFactors of production are inputs like labour land capital and natural resourcesFactor payments are payments to the factors of production eg wages rent etcoHouseholdsOwn the factors of production sellrent item to firms for incomeBuy and consume goods and servicesoFir
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