ECON1102 Lecture Notes - Lecture 1: Xm Satellite Radio, Gdp Deflator, Environmental Degradation
18 May 2018
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Week 1 – Aggregate Production and Prices
Secular Stagnation Hypothesis: Developed economies are experiencing a prolonged
period of low economic growth
• Persistently low levels of private consumption and investment
• Slowdown in quantity and quality of new innovations
GDP:
• Monetary value of final goods and services produced in a country during a given
period
• Measure of aggregate production or output
• Use market prices to value quantities of various goods and services
• Some excluded (i.e. cooking, cleaning – unpaid housework)
Economic term is Household Production – production of goods and services by
households for own consumption using their own labour and capital
• Some included – police services, public hospital, rental value of owner-occupied
dwellings
• How are unpriced goods valued in GDP?
Use cost of providing these goods and services as a measure of their contribution
to GDP: publicly provided goods and services such as police, public servants,
public hospitals
Rent on owner-occupied dwellings – imputed by ABS using data from Census on
rents and the type and location of owner-occupied dwellings
• Ipotat to esue iteediate iputs ot doule outed – final value
• Concept of Value Added: Maket alue of a fis podutio less the ost of iputs
purchased from other firms
• GDP is a flow variable – measured over period of time
• Excludes goods and services produced in earlier period and resold in current period
(second-hand goods)
Three Equivalent Ways to Measure GDP
• Production method
• Expenditure method
Expenditure on goods and services by final users = value of production
GDP = Expenditure
Y = C + I + G + NX
Y = C + I + G + X - M
Y + M = C + I + G + X
Supply of goods and services = demand for goods and services
• Income method
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Secular stagnation hypothesis: developed economies are experiencing a prolonged period of low economic growth: persistently low levels of private consumption and investment, slowdown in quantity and quality of new innovations. Use cost of providing these goods and services as a measure of their contribution to gdp: publicly provided goods and services such as police, public servants, public hospitals. Rent on owner-occupied dwellings imputed by abs using data from census on rents and the type and location of owner-occupied dwellings. Three equivalent ways to measure gdp: production method, expenditure method. Expenditure on goods and services by final users = value of production. Y = c + i + g + nx. Y = c + i + g + x - m. Y + m = c + i + g + x. Supply of goods and services = demand for goods and services.
