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GDP 

GDP gross domestic product- total market value of all final goods and services produced within a country's borders with in each year. 
GNP gross national product- the sum of all total goods and services produced by residents of a country during a given year. Using foreigners. 
Intermediate goods- goods that require further processing before they are ready for final use. Ex: steering wheel, something that you use to make a product


What’s not included in GDP? 
1.) Used goods/ second hand goods- Trying to avoid double or multiple counting. 
Ex: whoever purchased that item once is official. So, if someone bought it again it can't be counted.
2.) Gifts or transfer payments- can be public or private.
Ex: transferring funds from one institution/ individual to another. For private it would be scholarships for transfer it would be welfare or social security. 
3.) Stocks and bonds- purely financial transactions
4.) Unreported business activity- tips, things you receive in cash. 
5.) Illegal activity- drugs, trafficking, prostitute, etc. 
6.) Intermediate goods
7.) Non-market activities- volunteer or family work

GDP= C+IG+G+XN

C= Personal consumption expenditures 67% of the economy (saving money)
G= government spending
XN= net exports (exports- imports)
IG= Gross private domestic investment
 1.) New factory equipment 
2.) Factory equipment maintenance 
3.) Construction or housing
4.) Unsold inventory of products built in a year


Expenditure approach- ask all the producers the value of final goods and services that they produce and then add them up. More valid then the income approach.

EA= C+IG+G+XN

Income approach- add up all the income that resulted from selling all final goods and services produced in each year. Don't need to show a receipt.

Formulas to remember: 
IA= WRIP+statistical adjustment
W=wages (listed as compensation, salary, salary supplement, and employees)
R=rents (money owed to land lords)
I=interests (interest’s income, based upon capital)
P=profits (corporate profits)
Statistical adjustment- income approach must equal the expenditure approach.

Budget surplus/ Deficit= government purchases of goods and services+ Government transfer payments- government tax and fee collection.
+ is defect
- is surplus
Trade surplus/deficit= export - imports
- is defect
+ is surplus
National income=
option 1: Compensation of employees (wage and salary supplements) + rental income+ proprietor’s income (owner entrepreneur) + interest income+ Corporate profits. CE+RI+PI+II+CP
option 2: GDP- indirect business taxes- depreciation (consumption of fix capital)-net foreign factor payment. 
GDP- IBT- D-NFP
Disposable personal income= national income- household taxes+ government transfer payments
NI-HT+GTP

Net Domestic Product (NDP)= GDP- Depreciation

Net National Product (NNP)= GNP-Depreciation

GNP=GDP+NFFP (net foreign factor payment)

Gross (total) private domestic investment= net private domestic investment+ depreciation

Budget- government spends money (gained from taxes, businesses, and foreign nations) in two ways 
1.) Government spending or purchases of goods and services
2.) Government transfer fees
Budget deficit- total amount of money that government borrows in a year (because total government spending exceeds tax and fee revenue) 






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