1. The Circular Flow and Gross Domestic Product and Interpreting Real Gross Domestic Product
Lesson 23
Sections 10, 11

2. National Accounts
National Income and Product Accounts (National Accounts)
Spending of Consumers
Sales of Producers
Business Investment Spending
Government Purchases
Other money flows

5. Gross Domestic Product
GDP or Gross Domestic Product is the value of all Final Goods and Services
Production of Goods and Services
Aggregate Spending
Total of all Incomes
GDP = C + I + G + X – IM
Consumption (C)
Investment (I)
Government Purchases (G)
And net exports (X – IM)
Government Purchases
20.6%
Investment
11.4%
Net Exports
-2.7 %
Consumption
70.8%

6. Nominal and Real GDP Nominal GDP Real GDP Calculating Real GDP
The output of a state
Real GDP
Output of a state adjusted for inflation
Calculating Real GDP
Choose a base year (Nominal GDP), and then adjust for inflation for all of the other years (Real GDP)
Chain-Linking
Average between early and late based growth rates
Early based growth rates are going from
Late based growth rates are going from

7. What Real GDP Doesn’t Measure
GDP Per Capita
Happiness
Volunteerism
Natural Resources
Under the table payments
Black Market