January 27, 2017

GDP & GNP NOTES:

What is GDP?

• It is the total value of all goods & services produced within a country's borders in a given year.
• All production within U.S.A by U.S.A & foreign producers.
• Excludes production outside of the U.S.A even by americans. 

What is GNP? 

• It is the total value of all U.S 
• Includes production or income earned by Americans
• Excludes productions by non-americans

What is the formula for GDP?

• C+IG+G+XN

What is Consumption?

• It is the final goods & services being purchased. 
• 67% of the economy

What is Gross Private Domestic Investment?

• 17% of the economy 
• Ex: construction of new housing, factoring, factory equipment maintenance unsold inventory.

What is Government Spending?

• 18% of the economy 
• Ex: School buses, guns, and highway

What are Net Exports?

• -2% of the economy, we import more than we export. 
• To find Net Export: (Export-Import)

What is Included in GDP?

1. C
2. Ig
3. G
4. Xn

What is Excluded in GDP?

1. Intermediate Goods (avoid double or multiple counting)
2. Used or 2nd hand Goods (avoid double counting) 
3. Unreported Business Activities (TIPS) 
4. Stocks & Bonds (purely transaction, nothing is being produced.)
5. Nonmarket activities (volunteer work) 
6. Illegal activities (Prostitution & Drugs) 
7. Gifts or Transfer payments ( Scholarships, Social Security, Unemployment, Retirement. No production, put aside/ Not for now.)