GDP

(Nominal) GDP = market value of all finished goods and services produced within a country in a year

Key indicator of a nations economic wealth, providing insights into economic growth, productivity, standard of living

Included: Goods and services sold in the market, Capital goods (a tractor to do farmwork), government purchases, Exports

Excluded: Intermediate goods, Old products (house that is resold), non-market activities (polarbears), black work, imports, government transfers (e.g stimulus check)

Nominal GDP grows a) High inflation b) more/ better goods and services

Real GDP: Adjusts for inflation to compare GDP over time

Real GDP per Capita = Real GDP/ population; Adjust for different population sizes to comapre GDP for different countries

National Spending Approach —> GDP = C + I + Government purchases + Exports - Imports

Factor Income Approach —> GDI = Employee Compensation + Rent + Interest + Profit

Adjust for different costs of living in each countries; it shows how many baskets of goods and services a nation can buy