GDP

I.            GDP: Gross domestic product

            a.            The value of all the stuff made in the best country.

            b.            All production or income earned in the U.S. by U.S. and foreign producers.

             c.            C + I_g + G + X_n

                                i.            Consumptions of final goods and services (67%):

                              ii.            Gross private domestic investment (17%):

                                                1.            Housing construction

                                                2.            New factory equipment

                                                3.            Factory equipment maintenance

                                                4.            Unsold inventory

                           iii.            Government spending (18%). Too much spending

                           iv.            Net exports: Exports - imports (-2%)

           d.            Excludes production outside of the U.S. even by Americans.

                                i.            Intermediate goods (capital goods) because it would be a double count.

                              ii.            Used goods

                           iii.            Unreported business activities

                           iv.            Stocks and buns: Only financial transactions, no production.

                              v.            Non-market activity. (volunteer and self-stuff)

                           vi.            Illegal activities

                         vii.            Gifts and transfer payments: public or private. Such as the lottery, Social Sec., unemployment, and scholarships.

II.            GNP: Gross national product

            a.            Value of stuff made by the best country's people (Americans) in  a year.

            b.            Productions and Income earned by Americans anywhere in the world, excludes non-americans in the U.S. (BUILD THE WALL)

III.            Formulae

            a.            Net Domestic Product: GDP - depreciation

            b.            Net National Product: GNP - depreciation

             c.            Gross= Net + Depreciation

           d.            GNP: (GDP+ Net Foreign Factor Payment)

IV.            Nominal GDP

            a.            The value of output produced at current prices.

            b.            Can increase from year to year if either output or prices increase

             c.            Price x Quantity

V.            Real GDP

            a.            The value of output produced in constant "base" year prices.

            b.            Adjusted for inflation

             c.            Can increase from year to year only if output increases.

           d.            Used to measure actual economic growth

            e.            Price x Quantity

VI.            Real=Nominal in base year alone unless there's no inflation. After the base year, Nominal GDP will exceed Real GDP. Before base year, Real GDP will be higher than Nominal GDP.

VII.            Base year is the earliest year

VIII.            GDP deflator: (Nominal/Real)*100

IX.            CPI

            a.            Measures inflation by tracking changes in random prices of goods.

(nominal prices/real prices)*100