EC140 Lecture Notes - Lecture 2: Black Market, Retained Earnings, Environmental Quality
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EC140 Full Course Notes
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Understanding how value added eliminates double couning. Explain income and expenditure approaches to measuring naional income. Understand the diference between real and nominal gdp. Understand the relevance of gdp per capita. Gdp = total producion in a country. If all producion was sold and consumed, gdp would be easy to calculate. Outputs of one irm are inputs to another. Measuring the value of output counts some outputs more than once. Measuring gdp is about measuring inal producion. To avoid double couning measure value is added by all irms. Value added = sales revenue cost of intermediate goods. Value added = wages paid to workers + proits paid to owners. Total value added is a measure of total output. Gdp is value of inal goods and services produced. Also equals the income generated by producing that output. Producion, expenditure, and income are all equal by deiniion. Consumpion expenditure: goods and services sold to inal users.
