GDP: Measuring the National Economy

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Presentation transcript:

GDP: Measuring the National Economy By: Ben Quick

Gross Domestic Product (GDP) The market value of all final goods and services produced within a country in a given period of time Gross = total Domestic = national (ex: United States) Product = all goods and services produced Gross Domestic Product (GDP)

Intermediate goods, secondhand sales, and nonmarket transactions are excluded from GDP GDP tells nothing about the composition of output or the impact of production on quality of life Despite it’s limitations, GDP is still the best measure of overall economic health GDP (con’t)

The most common approach to measuring and understanding GDP is the expenditure method: GDP = consumption + investment + government spending + (exports – imports) GDP: C + I + G + F (or X) Computing GDP

Allows a nation to compare it’s economy to other nations Can be used to compare with past years using REAL GDP and applying the GDP price deflator* Importance of GDP

Real GDP is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation). Real GDP

GDP Rankings (2014) Rank Country GDP (in millions) 1 United States 17,418,925 2 China 10,380,380 3 Japan 4,616,335 4 Germany 3,859,547 5 United Kingdom 2,945,846 GDP Rankings (2014)