Measuring GDP and Real GDP By Bryce Baker

Measuring GDP and Real GDP By Bryce Baker and Aloha Atchison

So what really is GDP? GDP (Gross domestic product) is the total market value of all final goods and services produced annually in a country. So for example, as family would have an income, so does a country, GDP. When the GDP has a positive increase from the last quarters measurement, this signifies a healthy economy. The comparison between now and the last year is called base year.

The Variables GDP There are two variables that can change what the GDP is, and that is P and Q. P represents the price Q represents quantity Price Quantity GDP $10 $15 $10 2 2 3 $20 $30 If either P or Q rises, the GDP will also rise.

Economic Sectors In the economy, there are four different sectors. Households Business Government Foreign GDP in the US is more than $12 Trillion - All four of these sectors call there expenditures, different names. Households (consumption) Business (investment) Government (government purchases) Foreign (export spending) -

So how do we measure GPD? There are some things that we must take into consideration. what happens if consumers purchase outside of the US? This is called import spending and must be taken out of our formula to calculate GPD. http: //www. youtube. com/watch? v=8 z. ZLo. Pqs. Vmc

per capita GDP = GDP/Population Real GDP is a more realistic way to compute GDP based on constant years in the past. Real GDP can account for changes in the price level, and provide a more accurate figure. An inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as "constant-price", "inflation-corrected" GDP or "constant dollar GDP".

Quiz What does GDP mean? What are the four sectors? What are the expenditures for each sectors? How do you calculate GDP? Why must import spending be subtracted from export spending?

Bibliography • "Real Gross Domestic Product (GDP). " Investopedia. Web. 12 Mar. 2012. <http: //www. investopedia. com/terms/r/realgdp. asp>.