EC202 1nd Edition Lecture 8Outline of Last Lecture I. Gross Domestic ProductOutline of Current Lecture II. Measuring GDPIII. Expenditure methodCurrent Lecture-measuring GDP: valuing the output of industries-to measure the value of production of an industry, count only the value that is added bythat industry-value added: the value of a firm’s output minus the value of the intermediate goods it buys from other firms and uses to produce that output-the summing of the value added by all firms in the economy yields the total value of final goods and services-GDP: output produced within the home country-measures economic activity within a given country-all production taking place within home borders, even if produced by a foreign owned plant-Gross National Product (GNP): includes all economic activity in other countries by home residents and excludes home production of foreign owned plants-rate of output produced within a given period (normally a quarter or year)-expenditure method-GDP measures the quantity of goods and services produced by an economy, and also measures what will be purchased (since all produced goods are assumed to be purchased)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.-buyers of final goods and services:-1. Households2. firms-3. Government-4. Foreign
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