ECO 1104 Lecture Notes - Lecture 10: Net Income, Transfer Payment, Unemployment Benefits

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: Serge Nadeau

Document Summary

Chapter 5: measuri(cid:374)g a natio(cid:374)"s i(cid:374)co(cid:373)e: macroeconomics- study of how households and firms make decisions and how they interact in. Income = expenditure: every transaction has buyer and seller, circular flow diagram . Describe transactions between households and firms in simple economy. Money flows from households to firms and hen back to household: exclusions. Items produced and consumed at home that never entered the market place. Illegal goods (drugs booze, cigarettes: components, consumptions- spending by households on goods and services with exception of purchase of new housing. Investment- spending on capital equipment, inventories including household purchases of new housing, ex: expenditure on automobile by firms: gov. Purchases- spending on goods and services by local, state, and federal governments; excludes transfer payments: transfer payment ex: employment insurance benefit, net export (exports x imports m) Inflation rate- % change in the price index from the preceding period. Consumers substitute toward goods that have become relatively less expensive.