Tonya Blevins
ECO2072
Summer 2011
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Slide 1: Title
Slide 2: Index
Slide 3: Introduction
Slide 4: Consumption
Slide 5: Investments
Slide 6: Government purchases
Slide 7: Net Exports
Slide 8:How GDP relates to economics
Slide 9: Conclusion
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GDP measures market value of goods/services
GDP also measures income/expenditures
GDP is broken into four components:
◦ Consumption
◦ Investment
◦ Government Purchases
◦ Net Exports
Y=C+I+G+NX
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Spending by households on goods/services.
Can be durable or non-durable
Durable includes: appliances and automobiles
Non-Durables includes: food and clothing
Consumption excludes purchases of new housing
Intangible services include: medical care
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The purchase of goods for future use.
The sum of equipment, inventories, and structures.
Includes the purchasing of new housing
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Spending on goods/services by federal, local, and
state government.
Includes the following:
◦ Salaries of government workers
◦ Expenditures on public works
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Domestically produced goods by foreigners (exports).
Foreign goods by domestic residents (imports)
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Y=C+I+G+NX calculates growth of the economy in
the United States
From 1965-2010 GDP increased 3% per year.
Periods of declination = recession (figure 2, pg 503)
Recession = unemployment & bankruptcy
Higher GDP = better way of life
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GDP measures goods/services produced in the nation.
Goods/services measured during given time period.
Also measure Total income/Total Expenditures
Four Components:
 Y=C+I+G+NX
Higher GDP = better way of life