Gross Domestic Product
(GDP): The
total market value of all the final goods and services that are produced within
a countries borders in a given year.
Gross National Product
(GNP): The
total market value of all final goods and services by citizens of that country
on its land or foreign land.
Included in GDP
·
C:
Personal Consumption Expenditures (65% of what we spend)
·
IG: Gross
Private Domestic Investment (17% of what we spend)
o
New Factory Equipment
o
Factory Equipment Maintenance
o
Construction of housing
o
Unsold inventory of products built in a
year
·
G: Government
Spending (20% of what we spend)
o
School busses, teachers, salaries,
ditches, etc.
·
Xn: Net
Exports (Exports minus Imorts ) (-2% of what we spend) (More Imports than
Exports)
Not Included in GDP
·
Intermediate Goods: Goods that require further processing
before they are ready for final use
·
Used/Second-Hand Goods: Trying to avoid “double counting”
·
Purely Financial Transactions: Stocks & Bonds
·
Illegal Activities: Drugs
·
Unreported Business Activities: Unreported Tips
·
Transfer Payments:
o
Public-
Social Security, Veterans, Welfare
o
Private-
Scholarships
·
Non-Market Activity:
o
Volunteering
o
Babysitting
o
Any
work performed for yourself
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