MGEA06H3 Chapter Notes - Chapter 7: Government Spending, Market Basket, Gross Domestic Product

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA06H3
• Professor: Iris Au

Document Summary

Inputs and intermediate goods and services (an intermediate good is a good or service that is used in the eventual production of a final good, or finished product). Financial assets such as bonds, stocks, mutual funds. Three ways to calculate gdp: gives the same amount: the value added approach, the expenditure approach, the income approach. The expenditure approach: it adds up the spending on domestically produced final goods and services by households, firms, governments, and foreign buyers, there are four major categories, consumption (c) household"s spending"s on goods and services. Investment (i) spending on goods for future consumption. Business fixed investment the purchases of capital equipment, machinery and production plants. Residential investment the building of new houses. The economy as a whole is total spending = total income. Since the increase in the gdp over time may cause an increase in prices of goods/services and in production. o.