# GDP measurement - PowerPoint PPT Presentation

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GDP measurement. What you will learn. What is GDP?. Ways of measuring GDP. output approach. expenditure approach. income approach. Take this challenge. What is GDP ?. xample: In 2002, Hong Kong’s GDP was \$1,259.8 billion.

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GDP measurement

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GDP measurement

What you will learn ...

What is GDP?

Ways of measuring GDP

output approach

expenditure approach

income approach

Take this challenge

What is GDP ?

xample:

In 2002, Hong Kong’s GDP was \$1,259.8 billion.

Gross domestic product (GDP) is a measure of the total monetary value of _______________________ produced by all ________________________ of a territory or an economy over a specified period of time, usually a year or a quarter.

final goods and services

resident producing units

What is GDP ?

Key Points Parade

Gross domestic product (GDP) is a measure of the total monetary value of _______________________ produced by all ________________________ of a territory or an economy over a specified period of time, usually a year or a quarter.

final goods and services

resident producing units

1. monetary value

2. final goods and services

3. resident producing units

4. a specified period of time

The output approach

Key Points Parade

In the output approach, the GDP includes the value of ___________ only. Intermediate goods are excluded.

final goods

To avoid double counting, we use the ___________ method to find the value of final goods.

value-added

value of input from a previous stage

Value-added =______________-___________________

value of output

Example

double counting

Think zone

Q

Q

The output approach

In the value-added approach, we find the ___________ at each stage of production and then sum these ___________. The sum of the ___________ is termed __________________.

value-added

value-added

value-added

GDP at factor cost

Will output that involves little or no market value be included in GDP?

Answer

Will the value of unpaid services produced by households for own final consumption be included in GDP?

Answer

The expenditure approach

_______________________________

GDP = C + I + G + (X - M)

Private consumption expenditure

_____________________

_____________________

_____________________

The expenditure approach

GDP = C + I + G + (X - M)

gross domestic capital formation

+

Gross domestic fixed capital formation

Change in inventories

____________________________________

The expenditure approach

GDP = C + I + G + (X - M)

Government consumption expenditure

_________

_________

The expenditure approach

GDP = C + I + G + (X - M)

-

Imports

Exports

The expenditure approach

GDP = C + I + G + (X - M)

In the expenditure approach, we use the ____________ to find the expenditure on any final goods and services. This measure of GDP is termed ___________________.

market price

GDP at market prices

Q

Think zone

Q

Q

Q

Q

The expenditure approach

Is the expenditure on used-goods included in GDP?

Answer

Is the expenditure on illegal activities included in GDP?

Answer

Is the expenditure on the purchase of shares included in GDP?

Answer

Is the expenditure on welfare payments included in GDP?

Answer

Is GDP at market prices equal to GDP at factor cost?

Answer

The income approach

GDP measures the ___________ generated from production.

total income

Q

Supply final goods and services

Household

Firm

Supply factor services

Take this challenge

Are the GDP figures obtained by using the three approaches the same?

The basic ___________________ can illustrate this.

circular flow model

Suppose the total output of all firms is valued at \$100.

expenditure: \$100

revenue: \$100

income: \$100

cost: \$100

real flow

money flow

Q

Supply final goods and services

Household

Firm

Supply factor services

Take this challenge

Are the GDP figures obtained by using the three approaches the same?

The basic ___________________ can illustrate this.

circular flow model

By the output approach, the GDP is measured as the total revenue created by this flow of final goods and services.

expenditure: \$100

revenue: \$100

GDP =______

\$100

income: \$100

cost: \$100

real flow

money flow

Q

Supply final goods and services

Household

Firm

Supply factor services

Take this challenge

Are the GDP figures obtained by using the three approaches the same?

The basic ___________________ can illustrate this.

circular flow model

By the expenditure approach, the GDP is measured as the total expenditure spent on this volume of final goods and services.

expenditure: \$100

revenue: \$100

GDP =______

\$100

income: \$100

cost: \$100

real flow

money flow

Q

Supply final goods and services

Household

Firm

Supply factor services

Take this challenge

Are the GDP figures obtained by using the three approaches the same?

The basic ___________________ can illustrate this.

circular flow model

By the income approach, the GDP is measured as the total income arising from the production of this volume of final goods and services.

expenditure: \$100

revenue: \$100

GDP =______

\$100

income: \$100

cost: \$100

real flow

money flow

Q

Take this challenge

Are the GDP figures obtained by using the three approaches the same?

The basic ___________________ can illustrate this.

circular flow model

So in theory, they should be _________.

identical

But in reality, their values are _________ as a result of the difficulties in getting perfect data.

different