Unit 2 - GDP

January 27, 2015

GDP: Gross Domestic Product total money value of all final goods and services produced within a countries borders within a year.

GNP: Gross National Product total value of all final goods and services produced by Americans in a year.

GDP:  Whats Included  C + Ig + G + Xn

• C - "Consumption" its the 67% to the economy, purchasing finished goods and services.
• Ig - "Gross Private Domestic Investment"
• Factory Equipment maintenances
• New factory equipment
• New construction Housing
• Unsold Inventory of Products build in a year.
• G - "Government Spending"
• Xn - "Net Exports  
• Formula    Exports - Imports

Whats Excluded in the GDP

• Used or Second Hand Goods
• Intermediate goods is the goods or services purchase to resale or further processing or manufacturing. This is excluded to avoid multiple or double counting.
• Non Market Activity
• Illegal drugs
• Any unpaid work
• Prostitution
• Baby Sitting
• Growing own food for personal consumption
• Fixing your own things
• Financial Transactions
• Bonds
• Stock
• Real-estate
• Gift or Transfer Payments
• Private: Produces no output transfer fund from one private individual to another.                         Ex- Scholarships
• Public: Various contribute nothing to the current output or production.                               Ex: Welfare, Social Security