Module 3

Definition of GDP Which of the following is included in the measure of U.S.​ GDP? A pizza produced and sold by Pizza Hut in China. A pizza produced and sold in the United States. A pizza produced by American workers in Canada. The tomato sauce purchased by Pizza Hut and used to make pizzas.

B. A pizza produced & sold in the US

Define gross domestic product (GDP) as the measure of total output of an economy and explain its calculation.

GDP measures the market value of the goods, services, and structures produced by the nation's economy in a particular period >indicator of economic activity not well being >does not take into account poverty, crime, or literacy GDP is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. According to the Bureau of Economic Analysis (BEA), in 2015 the U.S. GDP totaled about $18 trillion in current dollars, and about $16.4 trillion in chained 2009 dollars, which represents the largest level of GDP among all countries in the world

Explain the Expenditure Approach and Income Approach via the Circular Flow Diagrams.

The expenditure approach measures GDP as the sum of consumption expenditure, C, investment, I, government expenditures on goods and services, G, and net exports of goods and services, (X − M).

GDP Expenditure Approach Net exports of goods and services increase when ______. exports of goods and services decrease by more than imports of goods and services increase investment increases exports of goods and services decrease but imports of goods and services decrease by more than exports decrease consumption expenditure increases

exports of goods and services decrease but imports of goods and services decrease by more than exports decrease

Differences between RGDP and NGDP Real GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices in _____ year. Nominal GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices of _____ year. intermediate; a base; final; that same final; that same; final; a base final; a base; final; that same final; that same; intermediate; a base

final; a base; final; that same Nominal GDP is the value of the final goods and services produced in a given year expressed in terms of the prices in that same year. Real GDP allows the quantities of production to be compared across time. Real GDP is the value of final goods and services produced in a given year expressed in terms of the prices in a base year.