Please enable JavaScript.
Coggle requires JavaScript to display documents.
MEASURING A NATION'S INCOME - Coggle Diagram
MEASURING A NATION'S INCOME
Real VS Nominal GDP
Real
Values the production of goods and services at constant prices
Nominal
Values the production goods and services at current prices
The components of GDP
GDP includes all items produced in the economy and sold legally in markets
GDP excludes most items that are produced and consumed at home and that never enter the market place
GDP (Y) is the sum of :
Consumptions (C)
: The spending by households on goods & services, with the exception of purchases of new housing
Investment (I)
: The spending on capital equipment, inventories & structures, including new housing
Government (G)
: The spending on goods and services by locals, state, and federal governments
Net Export (NX)
: exports minus imports
The GDP deflator
GDP deflator = nominal GDP / real GDP X 100
GDP and economic well-being
Higher GDP per person indicates a higher standard of living
Tells us the income and expenditure of the average person in the economic
Best single measure of the economic well-being of a society
The economy's income and expenditure
Whether the economy is doing well or poorly
Every transaction has a buyer and a seller
Microeconomics
How households and firms make decisions and how they interact with one another in market
Macroeconomics
Study the economy as a whole
Explain the economics that affects many householdss, firms and markets at once
The measurement of gross domestic product
GDP is the market value of all final goods and services produced within a country in a given period of time