GDP

Now we move on to GDP, the total market value of all final goods and services produced in a country's border within a given year, and we also move on to the exciting set of calculations that come with it.


What's included in GDP?
C- personal consumption expenditures 65%
Ig- Gross private Domestic Investment 17%

• factory equipment maintenance
• factory equipment
• construction of houses
• unsold inventory of products built in a year

G- Government Spending 20%

Xn- Net Exports (Exports-Imports) -2%

With this information we can find GDP using the expenditure approach which is 

GDP= C+Ig+G+Xn

There is also the income approach which is

Wages+Rents+Investments+Profits+Statistical Adjustments

          

Now that we've covered what's in GDP, we can discuss what's not in GDP which is

1. Intermediate Goods- a good that required futher processing
2. Used or Secondhand Goods- avoids double counting
3. Purely Economic Transactions (Stocks & Bonds)
4. Illegal Activity (Drugs)
5. Unreported Business Activity (Tips)
6. Transfer Payments
7. Non-market Activity