Measuring a Nation's Incom Flashcards
Exclusions of GDP
Illegal thing s, produced and consumed at home, internal transactions, intermediary goods
GDP
The market value of all FINAL goods and services produced within a country in a given period of time (usually quarterly)
GDP formula
Y= c+ I +G+ NX
Consumption in GDP
Spending by households in goods and services with the exception of purchases of new housing. Includes household spending on education.
Investment in GDP formula
Spending in capital equipment, inventories, and structured can including household purchases of new housing.
GNP
Gross national product: total income earned by a nation’s permanent residents. Includes income that citizens earn abroad and excludes income foreigners earn here.
Net national product (nnp)
Total income of a nation’s residents minus losses from depreciation
National income
The total income earned by the nation’s residence in the production of goods and services. It is almost identical to net national product. They are different because of the statistical discrepancy that arises in data collection
Government purchases in GDP equation
Spending in goods and services by local, state, and federal governments. Transfer payments not included
Nominal GDP
The production of goods and services valued at current prices
Real GDP
The production of goods and services valued at constant prices
GDP deflator
Measures current level of prices relative to the level of prices in the base year.
Weaknesses of GDP measuring economic well-being
GDP doesn’t not directly Measure those things that make life worth while, but it does measure our ability to obtain many of the inputs into a worthwhile life.
Leaves out leisure, quality of the environment, or the distribution of income, and the value of activity happening outside of the markets
GDP formula
(Nominal GDP/real GDP) x 100
