1. Module The Circular Flow and Gross Domestic Product KRUGMAN'S MACROECONOMICS for AP* 10 Margaret Ray and David Anderson

2. What you will learn in this Module : How economists use aggregate measures to track the performance of the economy The circular flow diagram of the economy What gross domestic product, or GDP, is and the three ways of calculating it

3. National Income and Product Accounts Reliability The National Accounts

4. The Simple Circular-Flow Diagram

5. The Expanded Circular-Flow Diagram

6. Gross Domestic Product Final goods and services Intermediate goods and services GDP Value of all goods and services produced (value added approach) Aggregate Spending (C + I + G + X N ) Total Factor Income

7. The Components of GDP

8. What's Included Domestically produced final goods and services, including capital goods, new construction of structures, and changes to inventories Not Included Intermediate goods and services Inputs Used goods Stocks & Bonds Foreign produced goods & services

9. Figure 10.3 Calculating GDP Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers

10. Figure 10.1 The Circular-Flow Diagram Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers

11. Figure 10.2 An Expanded Circular - Flow Diagram: How Money Flows Through the Economy Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers