Eco Notes 1 Unit 2 1/27/15
National income accounting- Economist collect statistics on
production, income, investing, and saving
2 ways to calculate GDP
1-
How much gas costs
GDP- gross domestic product
GNP- gross national product
GDP- total dollar value of all final goods and services
produced within a countries borders within a given year ex. Nike
In GDP- C+ Ig+ G+ Xn
C-
consumption- 67% of economy final goods and services
Ig-
gross private Domestic Investment 4 things under category
1-
Factory equipment maintenance
2-
New factory equipment
3-
Construction of housing
4-
Unsold inventory of product built in a year
G-
Government spending ex. School districts and military
Xn- Net
imports= exports – imports
Not in GDP-
1)
Used or secondhand goods
2)
Intermediate goods – goods and services that are
purchase or resale or for further processing or manufacturing avoid double or multiple counting
3)
Non- market activities- ex. Volunteer
activities, babysit, chores, illegal drug sales, trading
4)
Financial transactions ex. Stocks bonds real estate
5)
Gifts or transfer payments 2 types public and
private
Private-
simply transferring funds from one individual to another ex. Scholarship
Public-
where recipients contribute nothing to current production ex. Social security,
welfare
GNP- a measure of what its citizens produced and whether
they produced these items within its borders
