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What is GDP?

What is GDP?. The total dollar value of all final goods and services produced in the nation during a single year. There are two [2] methods to calculating GDP: EXPENSE METHOD (most common) and INCOME METHOD . EXPENSE GPD = Consumer + Investment + Government + Exports (N) INCOME

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What is GDP?

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  1. What is GDP? The total dollar value of all final goods and services produced in the nation during a single year. There are two [2] methods to calculating GDP: EXPENSE METHOD (most common) and INCOME METHOD. EXPENSE GPD = Consumer + Investment + Government + Exports (N) INCOME GDP = Wages +Interest + Rents + Profits

  2. What GDP is NOT • Intermediate Goods Not the parts in the car, but the car itself After-market car parts DO COUNT!

  3. What GDP is NOT • 2nd Hand Goods Your grandma’s ugly oriental vase you sell at a garage sale for $.75

  4. What GDP is NOT • Purely Financial Transactions Money earned on investments does not produce anything – (although it may be spent on something that will)

  5. What GDP is NOT • Transfer Payments Similar to investments, money the government pays out in welfare (food stamps, unemployment checks) – although purchases of final goods made with these monies DO!

  6. What GDP is NOT • Unreported legal income Tips, cash payments “under the table”

  7. What GDP is NOT • Illegal Activity “Well duh” … of course it doesn’t count!

  8. What GDP is NOT • American business activity outside the U.S.A. That is counted in GNP – Gross National Product

  9. What GDP is NOT • Labor not associated with any income A “work at home” parent or a volunteer at a food bank

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