calculating GDP formulas

Gross Domestic Product (GDP)

A measurement of the total goods and services produced within a country in a year

GDP does not include:

intermediate goods, transfer payments, non-market activity

Expenditure Approach Formula

GDP = C + I + G + (X-M)

What is used for the expenditure approach

Consumption, Investment, Government Purchases, Net Exports

Income Approach Formula

GDP = wages + rents + interest + profits - net foreign income + consumption of fixed capital (depreciation) + statistical discrepancy

Net Domestic Product Formula

GDP - depreciation

National Income Formula

NDP + Net Foreign Factor Income - Statistical Discrepancy

Personal Income Formula

NI - income earned, but not received + income received, but not earned

Disposable Income Formula

consumption + savings

Percent Change in GDP Formula

(year 2 - year 1 / year 1) x 100

GDP Deflator Formula

(Nominal GDP/Real GDP) x 100

Consumer Price Index Formula (CPI)

(Value in year 2/value in base year) x100

Inflation Rate Formula

(New CPI-Old CPI/Old CPI) x 100

Adjusting Price for Inflation Formula

X/Nominal Price New CPI/Old CPI

economic investment

spending for the production and accumulation of capital and additions to inventories

capital stock

the total amount of physical capital available in a country

transfer payments

payments by the government to households for which the government does not receive a new good or service in return

net foreign factor income

the difference between payments received from resources owned in foreign countries and income earned by people in foreign countries from resources owned domestically

nonmarket transactions

economic activity not taking place in the market and, therefore, not included in GDP

Nonproduction transactions

purely financial transactions and secondhand sales