GDP- Total Dollar value, within a countries border, within a year
GNP-Total value of all final goods and services, produce by americans in a year.
What is included in GDP- C+Ig+G+Xn
C= consumption, "67% is consumption", purchasing finished goods and services.
Ig= Gross Private Domestic Investment, Factor equipment maintenance, New Factory equipment, New construction housing, unsold inventory of a products built in a year.
G= Government Spending.
Xn= Net Exports. Exports-Imports
What is not included in GDP-
1. Used or secondhand goods
2. Intermediate Goods, are goods and services that are purchased for resales or for further processing or manufacturing." trying to avoid multiple or double counting"
3. Non-Market activity, illegal drugs, unpaid work, doing own repair jobs, pimping, baby sitting, growing own food.
4. Financial transactions- Stocks, Bonds, Real Estate
5. Gifts or transfer payments-
Public- Recipients contribute nothing, to the current output or production.
Private- Produces no outputs, simply transfer fund from on private individual to another.
Great notes! I would like to add an example of Public Gifts on Transfer Payments that I feel is necessary to know because we have had questions on it in class. An example would be Welfare and Social Security.
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