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GDP

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Building new homes could be harming the environment. National Income Accounting A system of statistics and accounts that keep track of production, ... – PowerPoint PPT presentation

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Title: GDP


1
GDP
  • Chapter 13

2
GDP
  • Gross Domestic Product
  • Dollar amount of all final goods and services
    produced within a countrys national borders in
    one year.

3
Why we need it
  • GDP helps tell us how the economy is doing.
  • If GDP is low, then the economy is not doing very
    well.
  • If GDP is high, then the economy is good.

4
How we compute GDP
  • Multiply all of the final goods and services
    produced in a 12-month period by their prices,
    and then add them up.

5
Exclusions
  • Intermediate Products
  • Secondhand Sales
  • Nonmarket Transactions
  • Underground Economy

6
Intermediate Products
  • Products used to make other products already
    counted in GDP.
  • Example Replacement tires for your car.

7
Secondhand Sales
  • The sales of used goods.
  • These things have already been counted in GDP and
    cant be counted again.

8
Nonmarket Transactions
  • Transactions that do not take place in the
    market.
  • Cant be measured.
  • Example Homemakers jobs at home
  • Cooking
  • Cleaning
  • Child care
  • Etc.

9
Underground Economy
  • Unreported legal and illegal activities.
  • Examples
  • Gambling
  • Smuggling
  • Drugs
  • Counterfeiting

10
Problems with GDP
  • Dont know what is included in GDP.
  • Could be military stockpiles.
  • Things in GDP may not actually be good for the
    world (only good for the economy).
  • Building new homes could be harming the
    environment.

11
National Income Accounting
  • A system of statistics and accounts that keep
    track of production, consumption, savings, and
    investments.
  • Also tells us how the economy is performing.

12
GNP
  • Gross National Product
  • The dollar value of all final goods and services,
    and structures produced in one year with labor
    and property supplied by a countrys residents.

13
Differences from GDP
  • GNP measures the income of all Americans but does
    not count in foreign made money.
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