EC140 Chapter Notes - Chapter 20: Disposable And Discretionary Income, Unemployment Benefits, Black Market
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EC140 Full Course Notes
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Document Summary
Production occurs in stages - most firms produce outputs that are other firms" inputs. Each firm"s contribution to total output is its value added. Summing value added avoids the problem of double counting when measuring total output. Total value added in the economy is called gross domestic product (gdp). Therefore, gdp is calculated by adding all the firms/stages of production value added. Because of the circular flow of income, these three measures yield the same total - Consider adding up the expenditures need to purchase the final output produced in any given year. Gdp from: consumption expenditure (c): includes expenditure on all goods and services sold to their final users during the year. This excludes government transfer payments (welfare, employment insurance, government bonds: net exports (nx): export import. Actual net exports (nxa) -> nxa = (xa ima) Exports are purchases of canadian-produced goods and services by foreigners. We subtract imports because they are not produced in canada.