1. What is it? What is counted?
GDP
What is it?
What is counted?

2. GDP-What is it? It is part of a nation’s national income accounting
It is the total market value of all final goods and services produced in a given year.
It is a monetary measure, because money gives us relative values of different goods.

3. GDP-What is it? Avoids multiple counting
It only counts the Final goods, not the intermediate goods
Each step of the manufacturing process adds value to the original good, and that is all included in the final price of the good.

4. GDP-What is it? Stage of Prod. Sale value Value added Sheep ranch 120
Sheep ranch
120
Wool Processor
180 60
Suit Manuf
220 40
Clothing Wholesale
270 50
Clothing retail
350 80
Total
1140

5. Formula C+I+G+Xn = GDP C = Consumer Spending I = Investment Spending
G = Government Spending
Xn = Net Exports (X-I)

6. GDP-What is it? GDP also excludes non-production transactions
Public Transfer Payments
Private Transfer Payments
Stock Market Transactions
Excludes Second hand sales

7. National Accounting Helps economists
Assess level of health of econ by comparing levels of production at regular intervals
Track long-run growth
Formulate policies that will safeguard econ

8. National Accounting GDP – depreciation = Net Domestic Product (NDP)
NDP – Net foreign factor income earned-Indirect business taxes + transfer payments = Personal Income (PI)

9. National Accounting PI- personal taxes = Disposable Income (DI)
DI = Consumption (C) + Savings (S)