ECN 301 Lecture Notes - Lecture 2: Gdp Deflator, Nominal Interest Rate, Government Budget Balance

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National income accounting: accounting framework used in measuring current economic activity. Product approach: measures amount of output produced, excluding output used up in intermediate stages of production. Value added= the value of output- the value of inputs purchased from others. Income approach: measures income received by the producers of output. Expenditure approach: measures the amount of spending by the ultimate purchasers of output. All three are the same because the market value of a good and the spending on a good is the same. Gdp: market value of final goods and services newly produced within a nation during a fixed period of time. Some goods are not sold in markets. Gdp includes only goods and services newly produced within the current period. Gnp: market value of final goods newly produced by domestic factors of production during the current period. Income paid to domestic factors of production by the rest of the world.

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