Ch notes: Measuring Nations Output

I.GDP- dollar amount value of all final goods and services produced in a country in a year. A. sampling method is used to determine GDP ( # of goods, services times price = GDP) B. intermediate products, like cost of a tire on a new car, not in GDP C. sale of used goods, not in GDP D. must me made in U.S to count in GDP E. non- market activities, like house work, not in GDP

F. illegal activities, like drug purchases, not in GDP G. if GDP goes up, U.S is more productive H. count only regular price, not sale price I. Calculated every 3 mo. J most important statistic in determining how economy is doing

II. 5 other ways to measure how our economy is performing ( GDP is the main way) 1. Gross national product (GNP) 2. Net national product (NNP)

3. National income (NI) 4. Personal income (PI) 5. Disposal income (DI) A. GNP = GDP + the sale of U.S goods not made in the U.S – the sale of non- U.S goods made in the U.S B. NNP= GNP – lost value of determining equipment C. NI = NNP – taxes D. PI = income going to consumers before taxes

E. DI = PI after taxes III. Why is it important for GDP to go up every year? 1. Our quality of living goes up. 2. Gov can collect & spend more money 3. Less poverty and crime 4. U.S. can help other countries IV. output expenditures model- calculates GDP by looking at the 4 sectors of our economy that spend: 1.consumer spending 2. Investment spending by businesses 3. Gov. spending 4. Exports minus import spending

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