Ch2: Gross Domestic Product

macro econ

Flow Variable

A measurable quantity that is defined over a period of time.

Give some examples of flow variables

Income, expenditure, production

Stock Variable

A measurable quantity that is defined at a specific point in time representing a snapshot of resources/assets.

Give examples of stock variable

wealth, capital, debt

What 5 goods or services are to be excluded from GDP

1.Products/Services produced by households not sold to others

2.Second-hand goods

3.Imports

4.Illegal goods/services

5.Existing assets traded

What are the things included in GDP

1.Goods produced by business firms (whether they are sold or not!)

2. Services by business firms

3. Goods and services produced by households and sold to others

4. Goods and services produced by governments ( include production costs)

What is excluded from GDP

1. Household non-market activities

2. illegal goods/services

3. Second-hand goods

4. Existing assets traded

5. Imports