What is GDP
Inflation
A general rise in the price level of an economy
Recession
a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. // Human words: Wide spread decline in income and employment
Problems with GDP
does not account for non-market goods, underground economy, environmental damage, leisure time or the distribution of income.
GDP
Currency value of all final goods and services produced within a country's borders
GDP per capita
Currency value of all final goods and services produced within a country's borders divided by the population
Real GDP
Currency value of all final goods and services produced within a country's borders minus the effects of inflation
Net exports
Dollar value of all goods and services produced in the United States and shipped to other countries
Investment
Dollar value of all goods and services purchased by business for the purpose of using in their business. Universities and houses counted
Consumption
Dollar value of all goods and services purchased by households
Government spending
Dollar value of all goods and services purchased by the various agencies of the United States.
GDP per capita measures
GDP/population, tells us the well-being of people
finished goods
Good that will not be sold again as apart of another good
Imports
Goods and services produced in other countries, then brought to the United States in exchange for currency
Exports
Goods and services produced in the United States, then sent to other countries in exchange for currency
Standard of living
Intangible concept that seeks to represent a country's level of economic prosperity. Correlates with GDP growth
GDP deflator equation
Nominal GDP/Real GDP x 100
business cycle
Short run movement in real GDP. Unpredictable, points out recessions
Growth rate of the economy
Rate of change of GDP for a specific time period. (New-old/old)
Aggregate Demand
The amount of goods and services ALL buyers in the economy are willing/able to buy at all the possible price levels
Aggerate supply
The amount of goods and services ALL companies are willing to produce at ALL possible price levels
Why split GDP?
Want to know where money is going
National spending approach to GDP
Y = C + I + G + NX
Factor Income Approach
Y = Wages + Rent + Interest + Profit (not as important)
GNP (Gross National Product)
total dollar value of goods & services produced by a nation at home or away