GDP Flashcards
GDP
The total value of all final goods and service produced in an year
Which type of expenditure has the highest share in the U.S. Economy
Personal Consumption
Final Goods and Services
Good:Cake that I bought from the store
Service:Paying for Netflix
Nominal GDP
GDP measured in current prices
Real GDP
The total value of production from specific base year
Value added approach
Measuring GDP by by summing the values added by all the firms in the economy
Value of output - Value of intermediate consumption
Expenditure Approach
-Adding up the dollar value at a current market prices of all final goods and services
-National Accounting Identity
National Accounting Identity
Y=C + I + G +X - M
C-Consumption(Household spending on goods and services)
I-Investment(Business spending on capital goods and inventories)
G-Government Purchases
X-Exports
M-Imports
Firms to households
Income,dividends,and interests. The firms give back to the households
Households to Firms
Households provide the labor force and the capital
Income Approach
-Adding up all incomes earned within a country during a specific period.
-Wages,profits,rents,and interest, taxes on production and imports, less subsides
Wages+Rent+Interest+Profits+Stastical Adjustments
Households supply factors of production
Firms utilize them to produce goods and services
GDP Calculation
Price • Quantity + Price • Quantity
Value Added
Sales revenue - purchases of intermediate products from other firms
