GDP: Gross Domestic Product

Gross domestic product (GDP) measures the total market value of all final goods and services produced within the economy during a given time.

The output or income definition can be used to determine the GDP. Let’s go over the output and income of GDP.

The output of GDP is the combined value of all the goods & services that have been produced in an economy during a given period.

The income of GDP measures the total income earned by all households, companies, and the government within the economy over a given period. That can include wages, profits, interest, rent, and other forms of income.

The GDP provides a comprehensive assessment and illustration of a country’s economic activities. Policymakers, companies, enterprises, and investors carefully track the GDP as it aids in decision-making.

A simple way to think of GDP is that it measures the flow of output and income in the economy. GDP represents the broadest measure of the value of all economic activity within a country during a given period.

· What are the two main approaches to calculating GDP?
· A standardized methodology for measuring GDP
· How to calculate GDP based on expenditures?
∘ Goods and Services Included at Imputed Values
· Nominal GDP and Real GDP
· What is the GDP deflator?
· Per capita real GDP
· The Components of GDP
∘ The household and business sector
∘ Government sector
∘ External sector
· National, Personal, and Personal Disposable Income
· The expenditure approach
· The Income approach
∘ Employee Compensation & Employers’ social contributions
∘ Gross operating surplus
∘ Gross mixed income
∘ Consumption of fixed capital (CFC)
∘ Household Income and Saving for the Canadian Economy
· Relationship among Saving, Investment, the Fiscal Balance, and the Trade Balance
∘ How Changes in Income and Taxes Affect Household Spending
· Marginal Propensity to Consume (MPC) & Marginal Propensity to Save (MPS)
· Interest Rates and Aggregate Output
· What Is the Aggregate Demand-Aggregate Supply (AD-AS) Model?
∘ Government Spending and Tax Policy Affect the Fiscal Balance
∘ The Relationship Between Income and Net Exports