Macroeconomics

Week 1

08/27/2025

• Gross Domestic Product

  • GDP is the market value of all final goods and services produced in a country during a period of time, typically one year.

  • Market value

    • Price of the goods

    • Equilibrium price essentially

  • Intermediate goods or service: One that is an input into another good or service.

    • GDP is only current production

      • It does not include the value of used goods.

Measure GDP using the value-added method

• Value added: The market value a firm adds to a product.

  • Essentially the price of the good minus the intermediate

    • Intermediate = the cost of production

      • Example: Apple makes an iPad sells for $900, costs them $700 to make. The value added is $200.