Gross Domestic Product 12-1

National Incomes Tracked by the U.S. Department of Commerce. Collect stats on production, income, investment, and savings and publish reports called National Income and product Accounts(NIPA).

Gross Domestic Product It is the dollar value of all final goods and services produced within a country’s border within a given year. Know dollar value, final goods, and border significance!!

Expenditure Approach Figure costs for: 1. Consumer goods and services 2. Business goods and services 3. Government goods and services 4. Net exports and imports of goods and services. ***Total figure equals GDP

Income Approach Used for better accuracy. Add up selling price of goods sold—represents money made by all groups involved in production of good or service.

Nomimal GDP Measured in current prices Inflation, or price increase, can cause misleading numbers in GDP.

Real GDP Use constant prices to measure production.

Limitations of GDP Nonmarket Activities Underground Economy Negative Externalities(clean environment and such) Quality of Life

Influences on GDP Aggregate Supply: how much is supplied at each price. Aggregate Demand: How much will be produced at all price levels.