1. Gross Domestic Product
Expenditure Approach
Output Approach
Limitations of Model

2. Warm-up: Why bother measuring economies. (GDP, GNP, per capita GDP etc

3. 1. Assess the health of economy 2. Comparison over time
Warm-up: Why bother measuring economies? (GDP, GNP, per capita GDP etc.)
1. Assess the health of economy
2. Comparison over time
Has it grown, been constant, declined?
3. International comparisons
4. Aids in forming economic policies.

4. GDP Clip from NPR and Slate

5. 3 ways to calculate GDP Value Added Income Approach
Adding together what each sector of the economy adds, gov., households, business
Income Approach
Sum all factor payments
Wages+interest+rent+profit=GDP
Expenditure (spending)
C+I+G+(X-M)=GDP

6. Some terms. . . . C = Consumer consumption G = Government consumption:
Durable:
Non-durable:
Services:
G = Government consumption:
I = Investment
Fixed investment:
Stock (inventory)
Work in progress:
X-M = Net Exports

7. Expenditure approach then is
GDP = C + I + G + (X-M)

8. We’re almost done
What are some problems with using GDP as a measure of wellbeing? 1. 2. 3. 4. 5.
Gross National Happiness