ECON 1012 Lecture Notes - Lecture 1: Potential Output, Purchasing Power Parity, Business Cycle
Document Summary
Gdp (gross domestic product) - the market value of all final goods and services and produced in a country in a given time period. Final goods - only count the whole product not the individual parts so you don"t count anything twice. Different from intermediate goods which are bought by other firms to make a final product. What people spend in an economy is equal to the income of the people in the economy. Income flow: firms factor market (labor, capital, land, entrepreneurship) . Expenditure flow : households goods market firms. Firms sell and households buy consumer goods and services in the goods market. Government expenditure : govs buy goods and services. Rest of the world: exports and imports. Expenditure approach : measures gdp as the sum of the expenditure flow (consumption expenditure, investment, gov investment on goods and services, and net exports) The equation for the expenditure approach is gdp=c+i+g+[y-m]