GDP

GDP(Gross Domestic Product)-Total dollar value of all final goods and services produced within a country borders within a given year. 


GNP(Gross National Product)- It is the total value of all final goods and services produced by Americans in a year.

GDP Formula: C + Ig + G + Xn

• C- Consumption

1. 67% to the economy
2. Purchasing finished goods and services

• Ig- Gross private domestic investments

1. Factory equipment maintenance 
2. New factory equipment
3. New construction housing
4. Unsold inventory of products built in a year

• G- Government spending

1. Xn-Net exports
2. Exports- imports= 

Excluded from GDP

• Used on secondhand goods
• Intermediate goods- Goods and services that are purchased for resale or for further processing or manufacturing avoid multiple or double counting
• Non-market activity- illegal drugs, any unpaid work, doing own repairs job at home, prostitution, babysitting, and growing own vegetables in the backyard.
• Financial transaction
• Gifts on transfer payments

1. Private- Produces no outputs, transfer funds from one private individual to another. 
2. Public- recipients contributes nothing to the current output or productions

• Household - A person or a group of people that share income
• Government 
• Firm (Businesses) - An organization that produces goods and services for sale
• Resources/Factor Market - A place where households sell resources and businesses buy resources
• Product Market - A places where goods and services are produced by businesses and are bought and sold by the household