Textbook Notes (363,501)
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Chapter 20

Chapter 20 Textbook Notes

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Western University
Economics 1022A/B
Jeannie Gillmore

Economics Chapter 20 January 9 Gross Domestic Product y Gross Domestic Product the market value of the final goods and services produced within a country in a given time period Four parts o Market valueThe prices at which items are traded in markets o Final goods and servicesFinal goodor service an item that is bought by its final user during a specified time periodIntermediate good an item that is produced by one firm bought by another firm and used as a component of a final good or serviceo Produced within a countryOnly products produced within a country count as part of that countrys GDP o In a given time periodNormally either quarter quarterly GDP data of a year or a year annual GDP dataGDP measures not only the value of total production but also the income and total expenditure GDP and the Circular Flow of Expenditure and Income y Insert picture y Households and Firms o Households sell and firms buy the services of labour capital and land in factor markets o Firms pay income to households o Firms retained earnings are part of the household sectors income o Consumption expenditure thetotal payment for consumer goods and services o Investment the purchase of new plant equipment and buildings and the additions to inventories y Governments o Government expenditure Governments buy goods and services from firms and their expenditure on goods and services o Governments finance their expenditure with taxes but theyre not part of the circular flow of expenditure and income y Rest of the world o Firms in Canada import and export o Net exports the value of exports X minus the value of imports M y GDP equals expenditure equals income o GDP can be measured in two ways
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