EC202 1nd Edition Lecture 11 Outline of Last Lecture I. Circular flowII. Government spendingOutline of Current Lecture II. Labor incomeIII. Capital incomeIV. Measuring outputV. Nominal GDPCurrent Lecture-labor income: made up of wages, salaries, and incomes of self-employed-accounts for 75% of GDP -capital income: payments related to physical capital-examples: factories, machines, and office buildings-can be…-profits of business owners-rent paid to land or building owners-or interest received by bond holders-accounts for 25% of GDP-measuring output-adding up the market value of all the final goods and services produced-adding up expenditures on the output of all final goods and services produced-adding up income (which is generated by the production of output)-GDPThese 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.-can be compared across different locations-for example: state-by-state GDP-can be compared across different times-for example: US GDP from 1990-2010-note: comparing GDP across time can be misleading due to the effect of inflation-nominal GDP-measures the quantities produced valued at current year prices-measures current dollar value of production-is not adjusted for
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