What is Gross Domestic Product? Economics 11 Stewart Where you see the pencil, copy the note!

What did you make? Do you know what you made at your job last week? Last year? Do your earnings increase or decrease since last week? Last year?

GDP is… Governments, economists, and politicians want to know what the country’s earnings were, and whether they are increasing or decreasing. The country’s earnings are measured using GDP

GDP is… “Gross Domestic Product measures the total value at market prices of all final goods and services produced in Canada over a period of time.”

Produced in Canada GDP measures “domestic” output of goods and services. That is, output from within Canada no matter who owns the product. GNP (Gross National Product) calculates Canadian-owned products no matter where they are.

Calculating GDP Expenditure approach – includes the expenditures of households on consumer goods, of business people on investment, the difference between imports and exports, and government expenditures.

Calculating GDP Income approach – includes the total amount of paid wages, rent, interest and profit (4 factors of production) (labour, land, capital, and entrepreneur)

Calculating GDP Economists prefer to use the “income approach” because the data is more accurate. Governments make both individuals and businesses keep track of every penny of income so it can be taxed.