ECON 1202 Lecture Notes - Lecture 3: Factor Cost, Operating Surplus, European Cooperation In Science And Technology
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Expenditure approach: the sum of investment, consumption expenditure, government expenditure, and net exports, gdp + c + i + g + (x-m) which also = y. Income approach: measures gdp by summing the incomes that firms pay households for the factors of production they hire, 1. Compensation of employees is they payments of labor services: 2. Net operating surplus: the sum of other factor incomes, includes net interest, rental income, corporate profits, and proprietors incomes. Depreciation: is the decrease in value of a firms capital that results from wear and tear. Gross investment: is the total amount spent on purchases of new capital and on replacing depreciated capital. Net investment: is the increase in the value of the firms capital. Nominal gdp: is the value of goods and services produced during a given year valued at the prices that prevailed in that same year, more precise name for gdp, used to calculate real gdp.