measur ing economic performance n.
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Measur ing Economic Performance. The market value of the final goods and services produced by workers and other resources located within the border of a nation over period of one year.

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gdp x gnp
The market value of the final goods and services produced by workers and other resources located within the border of a nation over period of one year

the market value of final output produced annually by all labour and property supplied by a nation’s households, no matter where those resources are employed

nominal gdp x real gdp
the market value of nation’s final output based on current prices for the goods and services produced during the year

an estimate of the value of a nation’s final products based on prices of certain base year

Nominal GDP x Real GDP
intermediate products and value added
Intermediate Products and Value Added
  • Intermediate products – products produced by business firms for resale by other firms or for use as materials or services that will be included in the value of resold good
  • VALUE ADDED = the extra worth that a business firm adds to intermediate products, it is measured by the difference between the market value of a firm’s sales, and the market value of the intermediate products that the firm purchases
  • Total value added = market value of - market value of

in a nation (GDP) all products intermediate products

methods of measuring gdp

1) Flow-of-Product Approach(The EXPANDITURE COMPONENTS OF GDP)

2) Earnings or cost approach (The INCOME SIDE OF GDP)

from nnp to disposable income
From NNP to Disposable Income
  • Net National Product
  • Indirect business taxes and other adjustments
  • National Income

- corporate profits

- net interest paid

-social security (payroll) taxes

+ government transfer payments

+ personal interest, dividends and other transfers

  • Personal Income - Personal taxes = Disposable income
net economic welfare
  • GDP
  • Nonmarket production
  • The value of leisure time
  • The underground economy
  • Cost of enviromental damage
potential output
Potential output

Production-possibility frontier





2. Calculate nominal GDP, net investment and real GDP, assuming GDP deflator 116, C = 740, a = 21, G = 305, X = 194, M = 178, indirect taxes = 289, profits = 357, wages = 481, rents = 9, net interests = 18.

3. Calculate real and nominal GDP using following dates: