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Canada (162,165)
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ECON 105 (113)
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Ch 20.docx

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Department
Economics
Course
ECON 105
Professor
Seong- Jun Choi
Semester
Winter

Description
Ch20TheMeasurementofNationalIncome02072014201NationalOutputandValueAddedobtainingatotalforthenationsoutputisnotthatsimplebecauseonefirmsoutputisoftenanotherfirmsinputintermediategoodsalloutputsthatareusedasinputsbyotherproducersinafurtherstageofproductionfinalgoodsgoodsthatarenotusedasinputsbyotherfirmsbutareproducedtobesoldforconsumptioninvestmentgovernmentorexportduringtheperiodunderconsiderationdoublecountingormultiplecountingtheerrorthatwouldariseinestimatingthenationsoutputbyaddingallsalesofallfirmsingeneralitisextremelydifficultifnotimpossibletosuccessfullydistinguishfinalfromintermediategoodsvalueaddedthevalueofafirmsoutputminusthevalueoftheinputsthatitpurchasedfromotherfirmsvalueaddedsalesrevenuecostofintermediategoodspurchasedfromotherfirmsvalueaddedpaymentsowedtothefirmsfactorsofproductionpaymentsmadetofactorsofproductionwagesprofitrentuseofcapitalarenotpurchasesfromotherfirmsandhencearenotsubtractedfromthefirmsrevenuewhencomputingvalueaddedvalueaddedisthecorrectmeasureofeachfirmscontributiontototaloutputtheamountofmarketvaluethatisproducedbythatfirmthesumofallvaluesaddedinaneconomyisameasureoftheeconomystotaloutput202NationalIncomeAccountingTheBasicsTheCircularFlowofExpenditurethevalueofdomesticoutputisequaltothevalueoftheexpenditureonthatoutputandisalsoequaltothetotalincomeclaimsgeneratedbyproducingthatoutputFigure201The3waysofmeasuringnationalincomeGDPall3mustyieldthesametotalValueaddedapproachaddupthevalueofallgoodsandservicesproducedintheeconomyGDPontheexpendituresideAddupthetotalflowofexpenditureonfinaldomesticoutputGDPontheincomesideaddupthetotalflowofincomegeneratedbytheflowofdomesticproduction
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