Economics Block 2 Chapter 25 Summary
Als de populate meer sttijt dan de dan de GDP daalt de GDP per person
LO 25.1 explain how gross domesti produit (GDP) is defned and measured.
National inooel aooonnting techniques used to measure the overall producton of a country's
economy as well as other related variables
Asslssing thl loonoey’s plrforeanol:
Bureau of economic analysis collect the natonal income and product accounts
Accountnj enables economists and policymakers to
o Assess health of economy (comparinj levels of producton at rejular intervals)
o Track lonj run course of the economy to see whether it has jrown, been constant, or
declined
o Formulate policies that will safejuard and improve the economy’s health
Gross doelstio prodnot (GDP)::
Measure of ajjrejate output
Monetary measure the value of output in monetary terms
Avoidinj multple countnj
o Ijnores intermediate joods
o Market value fnal joods joods that have been purchased for fnal use
o Count value added
gross doelstio prodnot The total market value of all fnal joods and fnal services produced
(GDP):: annually within the boundaries of a naton
Aggrlgatl ontpnt Primary measure of the economy’s performance is its annual total
output of joods and services
Intlreldiatl goods Products that are purchased for resale or further processinj or
manufacturinj
Final goods Goods that have been purchased for fnal use (rather than for resale
or further processinj or manufacturinj.)
GDP) ooepntations (oalonlation:
Exclude fnancial transactonss
o Public transfer payments
o Private transfer payments
o Stock market transactons
Exclude second hand sales
o Sell used car to a friend
, Economics Block 2 Chapter 25 Summary
Two approaohls to GDP):
1. Income approach
a. Count income derived from producton
b. Wajes, rental income, interest income proft
2. Expenditure approach
a. Count sum of money spent buyinj the fnal joods
b. Who buys the joods?
1.=wages+rents +interest + profits+ statistical adjustments
2. consumptionby households+investment businesses + goverment perchases+expenditures by foreigners
LO 25.2 Describe how expenditures on goods and services can be summed to determine GDP
)lrsonal oonsneption lxplnditnrls (C:
= The expenditures of households for both durable and nondurable consumer joods.
Consumer expenditures of services
Domestc plus foreijn joods produced
DPnrabll goods Nondnrabll goods
A consumer jood with an expected life (use) of a consumer jood with an expected life (use) of
three or more years less than three years. Examples computer vs
fresh food.
Gross privatl doelstio invlstelnt (Ig:
= Expenditures for newly produced capital joods (such as machinery, equipment, tools, and
buildinjs) and for additons to inventories.
Accountants include the followinj items
o All fnal purchases of machinery, equipment, and tools by business enterprises
o All constructon
o Chanjes in inventories
o Money spent on research and development (R&D) or for the creaton of new works
of art, music, writnj, flm and so on
Creaton of new capital assets
Noninvestment transactons exclude
Net investment = jross investment – depreciaton
Nlt privatl doelstio invlstelnt Gross private domestc investment less consumpton of fxed
capital; the additon to the naton's stock of capital durinj a
year.
Als de populate meer sttijt dan de dan de GDP daalt de GDP per person
LO 25.1 explain how gross domesti produit (GDP) is defned and measured.
National inooel aooonnting techniques used to measure the overall producton of a country's
economy as well as other related variables
Asslssing thl loonoey’s plrforeanol:
Bureau of economic analysis collect the natonal income and product accounts
Accountnj enables economists and policymakers to
o Assess health of economy (comparinj levels of producton at rejular intervals)
o Track lonj run course of the economy to see whether it has jrown, been constant, or
declined
o Formulate policies that will safejuard and improve the economy’s health
Gross doelstio prodnot (GDP)::
Measure of ajjrejate output
Monetary measure the value of output in monetary terms
Avoidinj multple countnj
o Ijnores intermediate joods
o Market value fnal joods joods that have been purchased for fnal use
o Count value added
gross doelstio prodnot The total market value of all fnal joods and fnal services produced
(GDP):: annually within the boundaries of a naton
Aggrlgatl ontpnt Primary measure of the economy’s performance is its annual total
output of joods and services
Intlreldiatl goods Products that are purchased for resale or further processinj or
manufacturinj
Final goods Goods that have been purchased for fnal use (rather than for resale
or further processinj or manufacturinj.)
GDP) ooepntations (oalonlation:
Exclude fnancial transactonss
o Public transfer payments
o Private transfer payments
o Stock market transactons
Exclude second hand sales
o Sell used car to a friend
, Economics Block 2 Chapter 25 Summary
Two approaohls to GDP):
1. Income approach
a. Count income derived from producton
b. Wajes, rental income, interest income proft
2. Expenditure approach
a. Count sum of money spent buyinj the fnal joods
b. Who buys the joods?
1.=wages+rents +interest + profits+ statistical adjustments
2. consumptionby households+investment businesses + goverment perchases+expenditures by foreigners
LO 25.2 Describe how expenditures on goods and services can be summed to determine GDP
)lrsonal oonsneption lxplnditnrls (C:
= The expenditures of households for both durable and nondurable consumer joods.
Consumer expenditures of services
Domestc plus foreijn joods produced
DPnrabll goods Nondnrabll goods
A consumer jood with an expected life (use) of a consumer jood with an expected life (use) of
three or more years less than three years. Examples computer vs
fresh food.
Gross privatl doelstio invlstelnt (Ig:
= Expenditures for newly produced capital joods (such as machinery, equipment, tools, and
buildinjs) and for additons to inventories.
Accountants include the followinj items
o All fnal purchases of machinery, equipment, and tools by business enterprises
o All constructon
o Chanjes in inventories
o Money spent on research and development (R&D) or for the creaton of new works
of art, music, writnj, flm and so on
Creaton of new capital assets
Noninvestment transactons exclude
Net investment = jross investment – depreciaton
Nlt privatl doelstio invlstelnt Gross private domestc investment less consumpton of fxed
capital; the additon to the naton's stock of capital durinj a
year.
