1. GDP Gross Domestic Product

2. GDP National income accounting- system that collects data on production, income, investment, and savings. National Income and Product Accounts- all the above data is stored and analyzed by the US Commerce Department. Used to determine Fiscal and Monetary policies of government

3. GDP Gross domestic product-the dollar value of all final goods and services produced within a country in 1 year Dollar value is total selling prices of all of goods and services Final goods and services are products in final form sold to consumers NOT intermediate goods such as steel.

4. Expenditure Approach Output-Expenditure Approach Economists estimate the annual amount spent (expenditures) on 1. Consumer goods and services 2. Business goods and services 3. Government Goods and services 4. Net exports or imports of goods and service GDP is found by adding up the 4 categroies

5. GDP Durable goods- consumer goods with long life ex- refrigerator, cars, DVD Non-durable goods-short term consumer goods such as light bulbs, shoes, food. Economists can also use the income approach **Adding up all the incomes in the economy Add up the incomes of a country. **Economists actually use both to fine tune final GDP numbers

6. Nominal vs Real GDP Nominal GDP- GDP measured at current prices in that current year. Inflation may skew and make GDP not accurate. Real GDP- use of a base year or constant price to calculate GDP. Calculations do not fluctuate with inflation or price increases. Must use 2 years to calculate real GDP

7. Limitations Nonmarket activities- GDP does not include services we do for ourselves No account of under the table transactions- includes black market but also cash exchanges Does not reflect quality of life

8. Other Measurements GNP- gross national product Annual income earned by U.S. owned firms and U.S. citizens Does not account for depreciation of lost value from wear and tear on machinery GNP-depreciation=Net National Product NNP-taxes=National income Pg 306

9. What influences GDP Aggregate Supply-a supply curve for the whole economy. The total amount of goods and services in the economy available at all possible price levels Aggregate Demand- the amount of goods and services in the economy that will be purchased at all possible price levels Figure 12.6 shows equilibrium