Gross Domestic Product (GDP)

1
Gross Domestic Product (GDP)

• The sum of the flow of all final economic goods
  and services produced by the domestic economy
  during a relevant period of time.
• GDP ?PiQi

2
National Income Accounting

• The set of rules and techniques used for
  measuring the total flow of output (goods and
  services) produced and the total flow of incomes
  generated by this production.

3
GDP

• Includes
• Market Transactions (wages, interest, rent,
  profits, .)
• Non-market Transactions (income-in-kind, .)
• Imputations (home consumption, rental value of
  owner occupied housing

• Excludes
• Market Transactions (illegal activities, used
  goods, stocks and bonds, underground economy,
  capital gains and losses, )
• Non-market Transactions (value of house persons)

4
National Product (Y)

• Consumption Expenditures (C)
• Investment Expenditures (I)
• Government Purchases of Goods and Services (G)
• Net Exports (NX)
• Y C I G NX

5
National Income (NI)

• Wages, Salaries and other Compensations of
  Employees
• Rental Income
• Net Interest and
• Profits
• Unincorporated Income
• Corporate Profits

6
From NI to GDP

• GDP National Income
• Indirect Business Taxes
• Capital Consumption Allowances
• Miscellaneous Adjustments
• Business Transfer Payments
• Inventory Valuation Adjustments
• Statistical Discrepancies

7
From NI to Disposable Personal Income (DPI) or
(YD)

• DPI National Income
• - Social Insurance Employers Share
• - Corporate Retained Earnings
• - Corporate Taxes
• Government Transfer Payments
• Business Transfer Payments
• Miscellaneous Payments to Individual
• - Personal Taxes

8
Other Measures of Income

• Gross National Product (GNP)
• GNP GDP
• Factor Payments From Abroad
• - Factor Payments to Abroad
• Net National Product (NNP)
• NNP GNP
• - Capital Consumption Allowances

9
Real GDP Vs. Nominal GDP

• Real GDP Nominal GDP / GDP Deflator
• Nominal GDP a.k.a. Current Dollar GDP
• Real DGP a.k.a. Constant Dollar GDP
• GDP Deflator is A Price Index

10
Index of Prices

• An index or prices shows the average percentage
  change that has occurred in some group of prices
  over some period of time.

11
Price Indices

• Consumer Price Index (CPI)
• measures changes in the prices of commodities
  commonly bought by households since some base
  period
• Producer Price Index (PPI)
• formerly known as the Wholesale Price Index,
  measures changes in the prices of commodities
  traded at the wholesale level

12
Price Indices

• Implicit Price Deflator for GDP
• measures changes in the prices of the commodities
  produced by the domestic economy since some base
  period