- Slides: 10
GDP Chapter 7
Gross Domestic Product • GDP is the total market value of a country’s output. It is the market value of all final goods and services produced within a given period of time by factors of production located within a country.
Terms 1: Final • Intermediate • Value added
What is not counted • Goods produced within the household • Used goods sold in the market even if to final buyers.
What is ? ? ? counted • Fixing damage: Earthquake or storm • Medical bills for lung damage due to bad air
GDP vs GNP • GDP factors of production located within a country • GNP factors of production owned by a country’s citizens, regardless of where the output is produced.
Calculating GDP • Expenditure Approach – Consumption, C – Investment, I – Government, G – Net Exports, EX - IM • GDP = C + I + G + (EX - IM)
Calculating GDP II • Income Approach • GDP = NI + some adjustments • National Income is total income earned by factors of production owned by a country’s citizens
GDP and Social Welfare • • • Leisure Reducing pollution Storm and other disaster damage. Underground economy Per capita ? ? Measure exchange rates
Nominal versus Real GDP • Nominal: Measured in current dollars • Real: adjusted for inflation.