Unit 2: GDP

Gross Domestic Product (GDP) is the market value of all final goods and services produced within a nation in a given year.


There are certain thing that are not included in GDP things such as:

-Intermediate Good (a product that needs further work)

- Used/Second hand good

- Purely financial transactions (Stock exchange)

- Illegal activities

- Unreported business activities such as tips

- Non market activities

- Transferred payments (scholarships, welfare, etc.)

- GNP (will discuss later on)

There types of transactions that are included in the calculation of GDP  include:

- Personal Consumption Expenditure or money spent on personal matters. This is represented by a C

- Gross Private Domestic Investment represented by an IG This includes money spent on:
       -Factory maintenance equipment
       - New factory equipment
       - Construction of housing
       - Unsold inventory of products made in a year. An example is a house that has been built with              movers living in it yet

- Government spending represented by G

- Net Export which in exports-imports. This is represented by XN