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Chapter 20

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Western University
Economics 1022A/B
Desmond Mc Keon

Chapter 20 20.1- GDP is the market value of all the final goods and services produced within a country in a given time period  GDP can be measures by the expenditure on goods and services or the income earned producing goods and services  Gross means before the depreciation of capital and domestic is measures after the depreciation of capital An intermediate good is a component of a final good whereas a final good is bought by a final user during a specific period of time  The blue side equals the red side..that is: Y= C + I + G +(X-M) o Where C is consumption expenditure, I is investment, G is government expenditure, and (X-M) or E is net exports (exports-imports) o GDP=consumption expenditure+ investment+ government expenditure+ net exports - to find the increase in real GDP, we subtract the increase in imports from the increase in investment and government expenditure 20.2- Measuring Canada’s GDP - the expenditure approach is the approach that sums together C, I, G and E (largest component being consumption expenditure) - the income approach is the approach the sums together wages, salaries, and supplementary labor income, other father incomes, indirect taxes less subsidies, and depreciation when we are measuring GDP (wages, salaries, and supplementary labor income being the largest component) To make total income equal to GDP, we add indirect taxes less subsides and add deprecation - Nominal GDP is the value of the final goods and services produced in a given year valued at the prices of that year (more precise name for GDP) - Real GDP is the value of final goods and services produced in a given year when valued at the prices of a reference base year To calculate real
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