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

What’s included in GDP?

C + Ig + G +Xn

• C: Consumption: takes 67% of the economy; final goods and services
• Ig: Gross private domestic investment: factory equipment maintenance, new factory equipment, construction of housing, unsold inventory of products built in a year
• G: Government spending Ex: buying new weapons, fort bend buying a new school
• Xn: Net exports: exports-imports

What's not included in GDP?

1. Used or secondhand goods
2. Intermediate goods: goods and services that are purchased for resale or for further processing or manufacturing
3. Non-market activities: volunteer work, babysit, illegal drug sales, trading, underground activities
4. Financial transactions: stocks, bonds, real estate
5. Gifts or transfer payments: scholarship, Christmas gift, social security, welfare payments
6. Foreign

Gross National Product (GNP): measure of hat its citizens produce and whether they produce these items within its borders

National income accounting: Economists collect statistics on production, income, investments, and savings