Gross Domestic Producthttp://www.npr.org/blogs/money/2011/10/26/141741360/video-what-is-g

dp

What is GDP?

The market value of all final goods & services produced within a nation’s borders in a given time period (often used annually)

Measures 2 things at once:1. Total income of everyone in the

economy2. Total expenditure on the economy’s

output of goods

3. What is & isn’t counted?

a. Products used in making other products

b. Buying used goodsc. They are charted in a yearly span d. Not produced in U.S.e. No way to measure outf. B/c they are illegal or avoid taxation

Calculating GDP

1. Consumption2. Investment3. Government spending4. Net exports

Formula: C+I+G+X=GDP

Real vs. Nominal GDP

Real GDP

Uses constant prices Real GDP changes when there is a

change in output

Nominal GDP

Uses current prices Nominal GDP changes when there is

a change in output or price

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