1/27/17: GDP & GNP

• Gross Domestic Product (GDP)
• Total value of all final goods & services produced within a country's borders in a given year.
• Includes all production or income earned within the U.S by U.S & foreign producers.
• Excludes production outside the U.S even by Americans.
• Gross National Product (GNP)
• Total value of all goods & services produced by Americans in a given year.
• Includes production or income earned by Americans anywhere in the world. 
• Excludes production by Americans even in the U.S
• GDP
• C + Ig + G + Xn
• Consumption
• Purchases of goods & services (final)
• 67% of economy
• Ig (Gross Private Domestic Investment)
• Construction of new housing, new factory equipment, factory equipment maintenance, unsold inventory of products built in a year.
• 17% of economy
• G (Government Spending)
• 18% of economy
• ex) school buses, highways

• Xn (Net Exports)
• Exports - Imports
• -2% of economy

• Included in GDP-
1. C
2. Ig
3. G
4. Xn
• Excluded from GDP-
1. Intermediate goods (avoid double or multiple counting)
2. Used or secondhand goods (avoid double counting)
3. Unreported business activities (tips)
4. Stocks & bonds
5. Non-market activity
6. Illegal Activities (underground/black market- prostitution, drugs)
7. Gifts or transferred payments (public or private) ex- scholarships, social security, unemployment.
• Stocks & Bonds
• Purely financial transaction, nothing is being produced.
• Net Domestic Product
• GDP - Depreciation 
• Net National Product
• GNP - Depreciation
• Depreciation
• Loss of value of capital equipment due to normal wear & tear.
• Gross Investment
• Net Investment + Depreciation
• GNP
• GDP + Net foreign factor payment
• Net Exports
• Exports - Imports