Gross Domestic Product

1. Gross Domestic Product 12-1

2. National Incomes • Tracked by the U.S. Department of Commerce. • Collect stats on production, income, investment, and savings and publish reports called National Income and product Accounts(NIPA).

3. Gross Domestic Product • It is the dollar value of all final goods and services produced within a country’s border within a given year. • Know dollar value, final goods, and border significance!!

4. Expenditure Approach • Figure costs for: • 1. Consumer goods and services • 2. Business goods and services • 3. Government goods and services • 4. Net exports and imports of goods and services. • ***Total figure equals GDP

5. Income Approach • Used for better accuracy. • Add up selling price of goods sold—represents money made by all groups involved in production of good or service.

6. Nomimal GDP • Measured in current prices • Inflation, or price increase, can cause misleading numbers in GDP.

7. Real GDP • Use constant prices to measure production.

8. Limitations of GDP • Nonmarket Activities • Underground Economy • Negative Externalities(clean environment and such) • Quality of Life

9. Influences on GDP • Aggregate Supply: how much is supplied at each price. • Aggregate Demand: How much will be produced at all price levels.