GDP

GDP: Gross Domestic Product: total value of all final goods and services produced within a country's borders within a given year.

GNP: Gross National Product- total value of all final goods and services produced by American in a given year. (opposite G.D.P)

GDP:
-all production on income earned in the U.S
INCLUDED:
-final goods/services
-income earned
-interest payments on corp. bonds
-currents production of final goods
-unsold outputs (business inventions)
EXCLUDED:
-intermediate goods ex: tire of a car
- transfer payments:
  -S.S
  -unemployment compensation
  - scholarship
  - no cell of stocks/bonds
  -used or second hand goods
  - nonmarket transaction
  -babysitting
  - illegal drugs
  -prostitution
  - personal crops
  - self repair

GDP= C+Ig+G+Xn
GDP= W+R+I+P
Budget= Transfer payments+Gov. Purchase Goods/Services
Budget= (+deficit) (- surplus)
Trade= Exports-imports
            (+surplus) (-deficit)

Nominal GDP- value of output produced in current prices.
Real GDP- value of output produced in constant or base year prices.
Nominal GDP- can increase from year -year, if either output or price increases (inflation).

Nominal GDP= P x Q
Real GDP can increase if output increases ONLY! (economic growth)
Real GDP= P x Q

GDP Deflator:
Nominal GDP x 100 = GDP Deflator
 Real GDP
*Base year will always be 100
- years after base year, GDP deflator will be greater than 100
-years before base year, GDP deflator will be less than 100

Consumer Price Index:
* Cost market basket in a given year x 100
   Cost market basket in a base year
- measures the cost of the market basket of goods of a typical urban american family
* Real GDP is adjusted for inflation
Inflation- general rise of price level
Deflation- fall of price level
Rate of inflation: CPI2-CPI1 x 100
                                CPI1