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Gross Domestic Product. 12-1. 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). Gross Domestic Product.
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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).
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!!
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
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.
Nomimal GDP • Measured in current prices • Inflation, or price increase, can cause misleading numbers in GDP.
Real GDP • Use constant prices to measure production.
Limitations of GDP • Nonmarket Activities • Underground Economy • Negative Externalities(clean environment and such) • Quality of Life
Influences on GDP • Aggregate Supply: how much is supplied at each price. • Aggregate Demand: How much will be produced at all price levels.