Econ 104 1st Edition Lecture 6 Outline of Last Lecture I The Labor Market A factor Market II The basic circular flow a simple Macro Economy III Real World Circular Flow IV Measuring Total Production in the Real World Outline of Current Lecture I Expenditure Approach to Calculation GDP II Fun Facts about GDP III IV Income Approach to Calculating GDP Production Approach to calculating GDP Current Lecture I II III Expenditure Approach to Calculation GDP a GDP C I G NX i C household expenditures consumption ii I Investment spending by firms on new plant and equipment capital goods and changes in inventories spending by HH s on new homes 1 Now including research and development costs 2 Also includes inventories goods that have not been sold yet iii G Government expenditures federal state local iv NX X M exports minus imports aka net exports Fun Facts about GDP a Durable goods last for 3 years b Nondurable goods doesn t last for 3 years c Services are the greatest household consumption d Consumption makes up 70 of the GDP Income Approach to Calculating GDP a GDP national income depreciation i National income wages rents profits net interest indirect business taxes 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 IV 1 Net interest interest on saving interest on debt 2 Indirect Business Taxes Sales Taxes ii Depreciation value of worn out machinery equipment and building is depreciation Production Approach to calculating GDP a GDP Price X Quantity i This is done for each good
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