MGEA06H3 Chapter : ECMA06 readings

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crimsonelephant524

17 Apr 2013

School

UTSC

Department

Economics for Management Studies

Course

MGEA06H3

Professor

Iris Au

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MGEA06H3 Full Course Notes

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Supplement a: measuring the total value of production. Supplement b: unemployment and inflation: how do we. Supplement c: the aggregate demand curve and how it. Measuring the total value of production in a country: The key variable in macroeconomics is the total value of production in a country, measured by the. Gdp measures the value of production that occurs over a period of time, usually a year (but sometimes a quarter of a year). The rate of increase of real gdp is considered to be a marker of the health of an economy. The first of these is called the expenditures approach and the second is the factor incomes approach, or simply, the income approach. It is useful to know something about these two different approaches. Because there are many different stages of production that any good goes through, avoiding double counting is an important objective when measuring gdp.

Related Questions

Gross Domestic Product (GDP) only measures the value of marketed goods and services for a country during a given period of time.

Is the GDP measure underestimating or overestimating national production and total income in the economy? Why?

What are the limitations of the GDP in measuring total output and national welfare? What products (services) are excluded from the GDP computation?

ambergnu461

Which phrase defines gross domestic product (GDP)?

A. the difference of expenditures made importing goods and income earned from exporting goods.
B. the total monetary value of all the finished goods and services produced in a country in a given period.
C. the economic value of the professional skills and knowledge used in the production of goods and services.
D. the total investments made for the manufacture of domestic products and services in one year.

blusheagle829

5. The income approach

The following table shows macroeconomic data for a hypothetical country. All figures are in billions of dollars.

	Billions of Dollars
Gross private investment (investment)	120
Capital consumption allowance (depreciation)	35
Exports	60
Imports	55
Government purchases	130
Personal consumption expenditures (consumption)	325
Indirect business taxes	20
Social insurance taxes	33
Corporate profit taxes	13
Undistributed corporate profits	4
Transfer payments	70
Personal taxes	90
Compensation of employees	380
Corporate profits	120
Rental income (of persons)	25
Net interest	40
Proprietors' income	5
Income earned from the rest of the world	90
Income earned by the rest of the world	45

National income can also be calculated based on disposable income. Use the following table to derive personal income and national income (in billions of dollars). Specify what needs to be added to disposable income to arrive at personal income, and explain how personal income should be adjusted to find national income.

	Billions of Dollars
Disposable income		500
Plus		+
Personal income		=
Plus social insurance taxes		+ 33
Plus		+
Plus undistributed corporate profits		+ 4
Minus		-
National income		=

National income is the total amount earned by the citizens of a country, while gross domestic product is the total value of goods and services produced within a country. To determine the gross domestic product, you have to make some adjustments to national income. Use the following table to derive gross domestic product and, as part of the process, net domestic product (NDP) (in billions of dollars). Again, specify what should be added to and subtracted from national income to arrive at the net domestic product, and what should be added to the net domestic product to arrive at the gross domestic product.

		Billions of Dollars
National income
Plus indirect business taxes		+ 20
Plus		+
Minus		-
Net domestic product (NDP)		=
Plus		+
Gross domestic product (GDP)		=

taupeweasel18

MGEA06H3 Chapter : ECMA06 readings

MGEA06H3 Full Course Notes

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