Economics 2, 1st ZH
GDP
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Measures the total income of everyone in the economy
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Measures the total expenditure on the economy’s output of goods and services
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Income must equal expenditure
GDP: Value of final goods produced within a country in a given period of timte
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Identity: Y = C + I + G + NX
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Y = GDP
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C = consumption: Spending by households on goods and services
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I = investment: Purchase of goods that will be used to produce other goods and services (No stocks)
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G = government purchases: Government consumption expenditure and gross investment
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NX = net exports, Exports-Imports
Nominal GDP
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Production of goods and services
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Valued at current prices
Real GDP
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Production of goods and services
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Valued at constant prices.
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Designate one year as base year.
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Not affected by changes in prices