ECON 1010 Chapter Notes - Chapter 20: Final Good, Indirect Tax, Factor Cost

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24 Jul 2016
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Chapter 20 – Measuring Gdp & Economic Growth
Gross Domestic Product:
Market value of the final goods and services produced within a country in a given time period.
4 PARTS:
1. Market Value
Valuing items at the prices they are at upon market trading.
2. Final Goods & Services
A final good or a service is an item that is bought by its final user during a specific time period.
An intermediate good or service is an item produced by one firm, bought by another firm, and used as a
component of a final good or service.
oDouble Counting: Counting the same thing many times.
3. Produced Within a Country
Only goods or services that a produced within a country counts in that country’s GDP.
4. In a Given Time Period
GDP measures the value of production in a given time period.
oQuarter of a year: QUARTERLY GDP DATA
oOnce a year: ANNUAL GDP DATA
GDP also measures income and expenditure.
oImportant because it shows a direct link between productivity and living standards.
* Rising incomes and rising value of production re 2 aspects of increasing productivity.
Circular Flow:
The economy consists of households, firms, governments, and the rest of the world.
The model is a foundation on which the national economic accounts are built.
HOUSEHOLDS AND FIRMS:
Households sell and firms buy the services of labor, capital, and land in the factor markets.
Firms pay income to households.
oWages for labor
oInterest for capital
oRent for land
Firms sell and households buy consumer goods and services.
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