Ms. Park

Linda, Tommy

What do you think is the difference
between GDP and GDP per capita?

Any guesses for top 10 countries?
1. United States
2. China
3. Japan
4. Germany
5. France
6. United Kingdom
7. Brazil
8. Russian Federation
9. Italy
10. India
11. Canada
$16,244,600 million
8,227,200 million
5,959,782 million
3,428,131 million
2,612,878 million
2,471,784 million
2,252,664 million
2,014,775 million
2,014,670 million
1,841,710 million
1,821,424 million
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Luxembourg $116,000
Qatar
98,000
Norway
97,000
Switzerland
83,000
Australia
66,000
UAE
64,000
Denmark
60,000
Sweden
58,000
Canada
51,000
Netherlands
50,000
United States
49,000
China
6,000
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

Per capita GDP = GDP / population
Real GDP: GDP expressed in constant dollars
from a base year
◦ Per capital real GDP = ???
Nominal GDP: GDP expressed in current
dollar value
Depending on how GDP is used, either of two
adjustments can be made:
1) Inflation adjustment: done by using
__________________.
2) Exchange-rate adjustment: done by
expressing all countries’ GDP in one
currency, usually in USD.

1. Excluded activities: GDP does not include
some types of productive activities. This can
understate economic activity and living
standards.
a) Non-market activities: homework, unpaid
childcare
b) Underground activities: smuggling, under-thetable money
2. Product Quality: GDP does not capture the
quality of improvements in products
3. Composition of output: GDP does not tell us
what is produced and purchased
4. Income Distribution: GDP does not reflect how
output is distributed among citizens
5. Leisure: With increased leisure, GDP
understates economic well-being
6. Environment: GDP does not differentiate
between activities that are harmful to the
environment and those that are not


Gross National Product (GNP): total income
acquired by Canadians both within Canada
and elsewhere
GNP= GDP + Net investment income

Traditionally, Canada’s GNP has been
less than GDP. Why do you think it is so?


Net Domestic Income (NDI): income earned by
households supplying resources in Canada
NDI = GDP – amounts that are not earning
from current production (indirect taxes,
depreciation, allowances, statistical
discrepancy, etc…)


Personal Income (PI): the income actually
received by households
PI = GDP + Government transfer payments +
Other payments to persons – earnings not
paid out to persons – net investment income
Disposable Income (DI)
= Household incomes – Personal taxes and
other personal transfers to the government

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Assignment from last class: Textbook
Question #1 & Handout Problem #1
Assignment for today: Textbook Question #2
&6