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Lecture Introduction to economics: Social issues and economic thinking: Chapter 6 - Wendy A. Stock
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Lecture Introduction to economics: Social issues and economic thinking: Chapter 6 - Wendy A. Stock
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Chapter 6 - Measuring economic activity. After completing this unit, you should be able to: Explain the circular flow model, define gross domestic product, describe differences in GDP across countries and time,. | Introduction to Economics: Social Issues and Economic Thinking Wendy A. Stock PowerPoint Prepared by Z. Pan Chapter 6 Measuring Economic Activity Copyright © 2013 John Wiley & Sons, Inc. / Photo Credit: Fuse/Getty Images, Inc 1 Explain the circular flow model Define gross domestic product Describe differences in GDP across countries and time Describe what business cycles are and how they occur Illustrate the workings of the aggregate demand/aggregate supply model Copyright © 2013 John Wiley & Sons, Inc. 2 After studying this chapter, you should be able to: 2 The Circular Flow Model shows the movement of income and spending between households and businesses in the economy. Copyright © 2013 John Wiley & Sons, Inc. 3 The circular flow model 3 Copyright © 2013 John Wiley & Sons, Inc. 4 The circular flow model with government and foreign sector 4 Exports are the sale of goods and services to foreign buyers. Imports are the purchases of goods and services from foreign producers. Copyright © 2013 John Wiley & Sons, Inc. 5 Foreign sector 5 Gross Domestic Product (GDP) measures the dollar value of all final goods and services produced in an economy in a given time period. “dollar value” “final goods” “in an economy” “in a given time period” Copyright © 2013 John Wiley & Sons, Inc. 6 GROSS DOMESTIC PRODUCT 6 The income approach uses incomes earned by producers to measure GDP. The value-added approach uses total sales minus the value of inputs to measure GDP. The expenditures approach uses total expenditures on final goods and services to measure GDP. Copyright © 2013 John Wiley & Sons, Inc. 7 Measuring gdp 7 Income approach GDP = farmer’s income + miller’s income + baker’s income GDP = $2 + $3 + $4 = $9 per period Value-added GDP = (farmer’s sale revenue - farmer’s input cost) + (miller’s revenue - miller’s cost) + (baker’s revenue - baker’s cost) GDP = ($2 - $0) + ($5 - $2) + ($9 - $5) = $9 per period The expenditures approach GDP = total expenditures on final goods and . | Introduction to Economics: Social Issues and Economic Thinking Wendy A. Stock PowerPoint Prepared by Z. Pan Chapter 6 Measuring Economic Activity Copyright © 2013 John Wiley & Sons, Inc. / Photo Credit: Fuse/Getty Images, Inc 1 Explain the circular flow model Define gross domestic product Describe differences in GDP across countries and time Describe what business cycles are and how they occur Illustrate the workings of the aggregate demand/aggregate supply model Copyright © 2013 John Wiley & Sons, Inc. 2 After studying this chapter, you should be able to: 2 The Circular Flow Model shows the movement of income and spending between households and businesses in the economy. Copyright © 2013 John Wiley & Sons, Inc. 3 The circular flow model 3 Copyright © 2013 John Wiley & Sons, Inc. 4 The circular flow model with government and foreign sector 4 Exports are the sale of goods and services to foreign buyers. Imports are the purchases of goods and services from foreign producers. Copyright
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