Term
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Definition
The value of a firm's output minus the value of the inputs that it purchases from other firms.
Value added= Revenue - Cost of intermediate goods
= Income to factors of production
Value added is the correct measure of each firm's contribution to total output. It is the Net Value of its output. |
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Term
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Definition
| The value of domestic output is equal to the value of the expenditure on that output, and is also equal on the total income claims generated by producing that output. |
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Term
| Gross Domestic Product - GDP |
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Definition
The total value of goods and services produced in the economy during a given period.
( 3 ways of calculating : - value added, total flow of income, total flow of expenditure ) |
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Term
| GDP from the expenditure side |
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Definition
| GDP for a given year calculated from the expenditure side by adding up the expenditures needed to purchase the final output produced that year. It is the sum of four categories of expenditure: consumption, investment, government purchases and net exports. |
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Term
| Consumption expenditure (C) |
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Definition
Consumption expenditure includes all expenditures on all goods and services sold to their final users during the year. Includes: services ( haircuts, lawyers), non-durable goods (food), durable goods (cars).
Actual consumption expenditure is denoted Ca. |
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Term
| Investment Expenditure (I) |
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Definition
| Expenditure on goods not for present consumption, including inventories, capital goods such as factories, machines, warehouses, and residential housing. |
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Term
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Definition
| Stocks of raw materials, goods in process, and finished goods held by firms to mitigate the effect of short term fluctuations in production or sales. |
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Term
| Plant and Equipment ( I of GDP) |
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Definition
| Capital goods such as machinery, tools, factory building, that are used to produce goods. The total quantity of capital goods in the economy is called capital stock. Creating new capital goods is an act of investment and is called fixed investment |
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Term
| Residential Housing ( I of GDP) |
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Definition
| Building a new house counts as investment. Not buying a home that was already built, that would simply be a transfer. |
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Term
| Gross and Net Investments ( I of GDP) |
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Definition
Gross investment ( replacement investment for replacing capital stock lost in depreciation). Net investment is equal to gross investment minus depreciation.
Net investment= Gross Investment - Depreciation
When net investments is positive it means that the economy's capital stock is growing |
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Term
| Government purchases ( G ) |
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Definition
| All government expenditure on currently produced goods and services, exclusive of government transfer payments. |
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Term
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Definition
| A payment to an individual or institution not made in exchange for a good and service ( welfare, employment insurance, even paying interest on government bonds) |
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Term
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Definition
The value of all goods and services purchased from firms, households, or governments in other countries.
( buying a german car form a canadian dealer: only the expenditure of the dealer goes into the GDP, not the car, as it went into Germany's GDP) |
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Term
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Definition
| The value of all goods and services sold to foreign countries. Added to our GDP |
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Term
| Net Exports NX = ( Xa - IMa) |
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Definition
| The value of total exports minus the value of total imports. |
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Term
| Total expenditures formula |
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Definition
| GDP= Ca + Ia + Ga+ (Xa - IMa) |
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Term
| GDP from the Income Side - Factor Incomes |
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Definition
1. Wages and salaries
2. Interest
3. Business Profits
Net Domestic Income: sum of wages, salaries and profits excluding the value of output used as replacement investment |
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Term
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Definition
1. Indirect Taxes and Subsidies
2. Depreciation |
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Term
| GNP - Gross National Product |
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Definition
The value of total incomes earned by domestic residents no matter where that income was generated
Canada has been a net debtor which means that the value of foreign located assets produced by canadian owners is less than the canadian generated income going to foreigners. Our GNP is therefore smaller by a bit than the GDP. |
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Term
| What is better: GNP or GDP? |
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Definition
GDP is a better measure of the countries domestic economic activity. If you want to know if you can easily find a job, whether factories are working double shifts, .. look at the GDP
GNP is a superior measure of the income of domestic residents. |
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Term
| GDP from the Income Side - Factor Incomes |
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Definition
1. Wages and salaries
2. Interest
3. Business Profits
Net Domestic Income: sum of wages, salaries and profits excluding the value of output used as replacement investment |
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Term
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Definition
1. Indirect Taxes and Subsidies
2. Depreciation |
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Term
| GNP - Gross National Product |
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Definition
The value of total incomes earned by domestic residents no matter where that income was generated
Canada has been a net debtor which means that the value of foreign located assets produced by canadian owners is less than the canadian generated income going to foreigners. Our GNP is therefore smaller by a bit than the GDP. |
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Term
| What is better: GNP or GDP? |
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Definition
GDP is a better measure of the countries domestic economic activity. If you want to know if you can easily find a job, whether factories are working double shifts, .. look at the GDP
GNP is a superior measure of the income of domestic residents. |
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Term
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Definition
| GDP valued at base-period prices. Changes in real income reflect only changes in quantities. |
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Term
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Definition
An index number derived by dividing nominal GDP by real GDP. Its change measures the average change in price of all items in the GDP
GDP deflator = GDP at current prices / GDP at base period prices * 100 = Nominal GDP / Real GDP * 100 |
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Term
| Changes in real per capita GDP |
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Definition
| Changes in real per capita income are a good measure of average material living standards. But material living standards are only part of what most people consider their overall well being. |
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