GDP Made Simple

Dollar value of everything made inside the United States. If it is not made in the USA, it does not count. Must be within the given year. 2015 GDP must only be made during 2015 Cannot count used items or parts of items. Must be a finished product.

How do I calculate GDP.

Expenditure (All the money spent on goods and services)

Income Approach Add up all the income earned in an economy

GDP= C+I+G+(X-M) Consumer spending+ Private Business Investment+ Government Spending (Purchases)+ Exports – imports (Net Exports). Net exports can be shown as (F, Xn, Nx)

Consumer Spending 70% Durable Goods last more than 7yrs Non Durable goods- meant to be used up quickly Services- work done by people who play a role in delivery of an activity.

Investment All new construction Spending on new factories and equipment New stock and inventory Gross Investment- Total of new investment Depreciation- The loss of value of equipment and housing Net investment- Gross Investment- depreciation

Government Purchases Newly purchased goods and services Includes any goods plus the wages and benefits of all government workers Majority is state and local governments. Not Included: Transfer Payments (Unemployment, foodstamps, WIC, SNAP) Used Good (counted another year), “Under the Table” transactions, black market, purely financial transactions (money passed from one person or entity to another.), Intermediate goods (unfinished or parts of an item).