GDP: It is the total value of all final goods and services and produced within a country borders in a given year. It includes all production or income earned with the US by US and foreign producers.
It excludes production outside of the US even by Americans.
GNP (Gross National Product): The total value of all final goods and services produced by Americans within the given year. It includes production or income earned by Americans anywhere in the world, it excludes production by non Americans even in the US.
FORMULA FOR GDP
C(Consumption 67%)+ Ig (Gross Private Domestic Investment 18%)+ G(Government Purchases 17%)+XN(net export -2%)
Included into GDP
C
IG
G
Xn
Excluded from GDP
Intermediate goods-inputs used to make final goods
avoid double counting or multiple counting
used or secondhand goods
stocks and bonds
no production
unreported business activities
gifts and transferred payments (public or private)
illegal activity
underground
non market activity
Expenditure approach:
C+IG+G+XN+Proprietors income
Income approach:
W(wages)-compensation of employees/salaries
+
R(rents)- income received by the household and business that supply the resources
+
I(interest)-money payed by private business to due suppliers of loans used to purchase capital
+
P(profits)-when you are your own business
Statistical adjustments
Trade Formula:
exports-imports
Budget Formula:
Government purchases of goods and services + government transferred payments- government tax and fee collection
Positive: DEFICIT negative: SURPLUS
National Income Formula:
Compensation of employees+rental income+interest income+ proprietor's income+ corporate profit
GDP- Indirect business taxes – Depreciation – Net foreign factor payment
Net domestic Product:
GDP- Depreciation
Disposable Personal Income:
National income-personal household taxes+government transfer payment
Net National product:
GNP- Depreciation
Video above will clearly explain all the notes taken during this post, enjoy!!
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