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Chapter 20
The Measurement of
National Income
Domestic Households
Savings Consumption
Taxes
Domestic Households
Investment
Consumption
Governments
Foreigners
(Exports)
• inventories
• plant and equipment
• residential housing
Ca + Ia + Ga + (Xa - IMa)
= GDP
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NO! INVENTORIES!
INVENTORIES!
INVENTORIES!
Source: Statistics Canada website: www.statcan.ca. Go to “Canadian Statistics” and click on “Economic
Conditions” and then “National accounts.”
Factor Incomes
Wages, salaries and supplementary income 678.9 49.6%
1368.9 100.0 %
Total
Source: Statistics Canada website: www.statcan.ca. Go to “Canadian Statistics” and click on “Economic
Conditions” and then “National accounts.”
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What goes into the firm’s revenue must come out as wages,
rent, interest, profits, indirect taxes or depreciation.
Nominal GDP
GDP Deflator = x 100
Real GDP
• illegal activities
• Leisure (consumption of non-work time)
• the underground economy (tax & regulation avoidance)
• home production (non-market activity)
• economic “bads” (pollution)