GDP and GNP- January 30, 2017

GDP and GNP

• Gross Domestic Product (GDP):
  -Total value of all final goods & services produced within a country's borders in a given year.
  -Includes all production or income earned within the U.S by U.S and foreign producers.
  -Excludes production outside of the U.S, even by Americans.
• GDP formula: 
  -C + Ig + G +Xn
• C: consumption (67%)
• Ig: Gross private Domestic Investment (18%)
  -Factor equipment maintenance
  -New Factor equipment
  -Construction of Housing
  -Unsold inventory of products built in a year

• G: Government purchases (17%)
  -The government purchasing goods, services, weapons, etc.
  
  
• Xn: Net exports (-2%)
  -Exports - Importsk
  
  
• Included in GDP:
  -C, Ig, G, Xn
• Excluded in GDP:
  1)Intermediate goods
      -inputs used to produce final goods and services
      -avoid double or multiple counting
  2) Used or Second hand goods
      -avoid double or multiple counting
  3) Stocks and bounds
      -no production involved
  4) Gifts or Transfer Payment
      -Private + public
      -Scholarships, social security, unemployment
  5) Illegal Activities
  6) Unreported Business activities
      -Tips
  7) Non- Market Activity
      -Volunteer, babysitting