1. National Income Accounts

2. GDP (Gross Domestic Product) is the total market value of all final goods and services produced within a country’s borders in a single year—currently $18 T
GNP (Gross National Product) is the total market value of all goods and services produced by Americans in a year.

3. What is included in GDP?
Consumer spending (C)--accounts for 70% of GDP.
Durable goods
Non-durable goods
services

4. Business investment (I)
Capital goods
Increases in business inventories
(unsold items)
All construction, including houses

5. Government purchases of goods and services (G)
Net exports, which is exports minus imports (X-M, or Xn)

6. What is excluded from GDP?
Purely financial transactions
Transfer payments, like social security or unemployment insurance payments
Securities transactions—stocks and bonds
Used goods
Do-it-yourself work
Underground economy

7. Real vs. Nominal GDP
Real GDP has been adjusted for inflation (prices rising) or deflation (prices decreasing)
Nominal GDP is expressed in current year prices.
Real GDP per capita is used to define a nation’s standard of living