ECON 202 Lecture 2: Chap2-Spring2016
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National income accounting: gross domestic product (gdp) The total value of goods and services produced in an economy: fundamental identity of national income accounting: Total production = total expenditure = total income. Measuring gdp: production approach, expenditure approach, income approach. Measuring gdp: the production approach: gross domestic product (gdp) Is the current market value of all final goods and services newly produced in the economy during a fixed period of time. In the case of apples and oranges, we multiply their prices and quantities, and then add them up: gdp = (price of apples quantity of apples) + (price of oranges quantity of oranges) Not all goods and services are counted in gdp because they are: Many nonmarket goods and services are counted in gdp by their imputed values. Gdp includes only goods and services that are newly produced in the current period. If you buy a 3-year-old car from a car dealership.