the output of an economy includes both goods and services
ex: haircuts, medical care, entertainment, and transportation
since 1950, services have increased from under 50% of US GDP to almost 70%
GDP measures production
sales of old houses, used goods, and financial assets don’t add to GDP, the services of real estate agents, used-car salespeople, brokers, etc. add to GDP (services provided by these agents are produced in the year in which the goods or services are sold)
US GDP includes goods and services produced by labor and capital located in the United States
for a good or service to count toward a country’s GDP, the production must occur within the borders of that country
GDP tells us how much the nation produced in a year, not how much it has accumulated in its entire history
nationalwealth: the value of a nation’s entire stock of assets
68 percent of the total wealth in the US was owned by the top 10 percent of earners
wealth is determined by taking the total market value of all physical and intangible assets owned, then subtracting all debt
wealth not only allows you to endless goods of the world, but it also gives you peace of mind that you don’t have to work endlessly to just get by
the biggest determinate of wealth is labor income
unpaid work and products that have been resold don’t count
a healthy GDP rate would be about 2 to 3 percent
it is possible for GDP to be too high
governments don’t have much power to change GDP
GNP
GrossNationalProduct: the market value of all finished goods and services produced by a country’s permanent residents, wherever located, in a year
this is similar to the GDP, but measures what is produced by the labor and property supplied by United States permanent residents
the US has the largest GNP in the world
Growth Rate of GDP
GDP tells us how much a country produced in a given year
growthrateofGDP: tells us how rapidly the country’s production (or income) is rising or falling over time
present-past/past x100%
ex: retail stores, real estate transactions, food services, etc.