Wednesday

 Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 8 The Data of Macroeconomics
Chapter 23 of 36 Measuring A Nation’s Income
Section 5 of 15
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Gross domestic product, GDP, can be defined as the market value of all final goods and services produced within a country in a given period of time.
A final good is a product ready for sale to be used by the consumer to satisfy current wants or needs, unlike an intermediate good which is used to produce other goods.
A microwave oven or a bicycle is a final good, but the parts purchased to manufacture it are intermediate goods.
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GDP definition breakdown:
·1· GDP is the market value
·2· of all
·3· final
·4· goods and services
·5· produced
·6· within a country
·7· in a given period of time
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·1· GDP is the market value
The GDP measurement adds together many different kinds of products into a single measure of the value of economic activity using market prices
Market prices, because they measure the amount people are willing to pay for various goods, show the value of those goods.
·2· of all
GDP is a measure that
· includes all final goods produced and sold legally in markets
· measures the market value of apples and oranges, books, computers, barber shop haircuts and all goods and services
GDP includes the market value of housing services provided by the economy's stock of housing.
For rental housing, this value is easy to calculate, the rent equals both the tenant's expenditure and the landlord's income.
Many people own their home and do not pay rent.
This owner-occupied housing is included in GDP by estimating its rental value.
Assuming the owner is in effect renting the house to himself, the rent value is included both in the homeowner's expenditure and income.
GDP excludes some things because measurement is difficult, such as
· black market items such as illegal drugs
· goods and services produced and consumed at home
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black market items
yamiichi no aitemu