1. Measuring the Nation’s Output and Income

2. Gross Domestic Product (GDP)
The dollar value of all final goods, services, and structures produced within the country’s national borders during one year

3. Multiply what is produced by it’s price
Measuring GDP
Multiply what is produced by it’s price
It is impossible to track every single sale so statisticians use scientific sampling to estimate real values
GDP is estimated quarterly

4. Intermediate Products Secondhand Sales Nonmarket Transactions
Excluded in GDP
Intermediate Products
Secondhand Sales
Nonmarket Transactions
Underground Economy

5. Real GDP – Measured with a set of constant base year prices
Current GDP vs. Real GDP
Base Year
Real GDP – Measured with a set of constant base year prices
Current GDP – Measured with prices for the given year

6. GDP divided by the population
GDP Per Capita
GDP divided by the population
Tells you the amount of output per person

7. Tells nothing about composition of output
Limitations of GDP
Tells nothing about composition of output
Tells little about the impact of production on the quality of life
Some things in GDP give us little utility or satisfaction

8. Gross National Product (GNP)
The dollar value f all final goods, services, and structures produced in one year with labor and property owned by a country’s residents

9. GNP minus depreciation
Net National Product
GNP minus depreciation
Depreciation is capital consumption allowances, it represents equipment that wore out or became obsolete during the year

10. Income that is left after all taxes are subtracted
National Income
Income that is left after all taxes are subtracted

11. Personal Income
Total amount of income going to consumers before individual income taxes are subtracted

12. Disposable Personal Income
The total income the consumer sector has at its disposal after personal income taxes

13. Economic Sectors and Circular Flow