national income Flashcards
what is gdp
total market value of all goods and services produced in a country during a year
calculate gdp expenditure side
gdp = c + I + G + NX c is consumption by house holds I is investment from firms G is government spending on goods and services NX is net exports when importing we use a negative number. only for stuff that helps production ( goods and services)
calculate gdp income side
gdp = labor income + capital income + indirect taxes
is gpd on the income side equal to gdp on the expenditure side
yes
real gdp
the value of goods and services adjusted to inflation
nominal gdp
the value of goods and services not adjusted for inflation
gdp deflator
ratio of nominal gdp to real gdp
real gdp calculation
nominal gdp divided by deflator
gdp deflator equation
nominal gdp divided by real gdp multiplied by 100
gdp per capita
gdp per person and tells you the average goods and services a person in a country gets
things we dont include in gdp
black markets and criminal stuff , tax evasion , cuz gdp is the total market value anything that is hidden from the market wont be accounted for. this is weird in 3rd world countries cuz they are usually self seffiecnt so most activities wont appear in the market. stranded of living in a country plays a big role
Why is the GDP a good measure of welfare
the higher the gdp the more value people are getting
intermediate product
a products that produces other product like a factory etc this should be subtracted from the final value of goods
investment definition
the production of goods not for immediate consumption use
double counting
value of a output is calculated more than once
