GDP

micro

individuals and firms

macro

economy as a whole

GDP

measures total income of everyone in the economy

income =

expenditure

factors of production

inputs (labor, land, capital, and natural resources)

final goods

intended for the end user

intermediate goods

used as components/ingredients in the production of other goods

Which type of goods are counted in GDP?

Final Goods

annual

actual

annualized

prediction (multiplied by 4)

GDP =

total spending

GDP formula

Y (GDP) = C + I + G + NX

Consumption

total spending by households on goods and services

consumption and housing

rent payments and imputed rental value are included, mortgage and purchase price aren’t

Investment

total spending on goods that’ll be used in the future to produce more goods

examples that are included in investment

capital: equipment, structures, inventory

What years count in GDP?

Only the year the good was produced

Government Purchases

all spending on goods and services done by the government (excluding transfer payments)

Net Exports equation

NX = exports - imports

Net Exports

represents foreign spending on the economy, must be produced in the country towards the GPD is being counted for

value added

cost of intermediate goods added into the final price

Nominal GDP

not corrected for inflation

Nominal GDP equation

(price \* *amount) + (price* \* amount)

Real GDP

corrected for inflation

Real GDP equation

(base year price *amount) + (base year price* \* amount)

Percentage change equation

% change = ending value - starting value/starting value

GDP deflator

GDP Deflator = 100 (nominal/real)