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Lecture 10: GDP and economic growth - Coggle Diagram
Lecture 10: GDP and economic growth
GDP
nominal GDP:
current
market prices
real GDP:
base period
prices => focus on total
output
than prices
Measurement
value of expenditure
AD = C + I + G + X
Y + M = C + I + G + X
Y = C + I + G + (X - M)
value of income
wages represent the contribution of
labor
to output
profits represent the contribution of
capital
value of production
value added method (L10-9)
what is not counted? (L10-17)
home production
illegal production
leisure
environment
free stuff
Changes in GDP over time
Seasonality
Random events
Business Cycle
Long Run Trend (
economic growth
)
Where does growth come from?
Capital stock
Labor supply
Y = Af(L,K)
A: total factor productivity (technical knowledge and efficiency)
Cobb Douglas production function
(L10 -33)
diminishing marginal product
constant returns to scale
: increases both K and L by t => output will increase by t
Growth Accounting
Formula: page 39