1. Macroeconomics Chapter 21 National-Income Accounting: Gross Domestic Product and the Price Level C h a p t e r 2

2. Macroeconomics Chapter 22 Nominal GDP  the dollar (or euro, etc.) value of all the goods and services that an economy produces during a specified period, such as a year.

3. Macroeconomics Chapter 23 Nominal GDP Flow variable - it measures the dollar amount of goods produced per unit of time, such as a year. GDP in current dollars Services by government: measured by costs

4. Macroeconomics Chapter 24

5. 5 Real GDP  Calculating Real GDP GDP in constant dollars Multiply each year ’ s quantity of output of each good by the price of the good in a base year. Chain-weighted real GDP

6. Macroeconomics Chapter 26 Calculations  (nominal GDP)/(implicit price level) = real GDP or  implicit price level = (nominal GDP)/(real GDP)

7. Macroeconomics Chapter 27 GDP as a Welfare Measure GDP does not:  Consider change in income distribution  Include non-market goods.  Assign value to leisure.  Consider environmental damage.

8. Macroeconomics Chapter 28 GDP by Expenditure  Personal Consumption Expenditures  Gross Private Domestic Investment  Government purchases of Goods and Services  Exports and Imports

9. Macroeconomics Chapter 29

10. 10 Measuring GDP by Income  National Income – Income earned by factors of production.

11. Macroeconomics Chapter 211 Relationship between GDP and National Income

12. Macroeconomics Chapter 212 National Income by Sector

13. Macroeconomics Chapter 213 Prices  Consumer Price Index (CPI)  Producer Price Index (PPI)  Problem of CPI(PPI) substitution quality new production