Lesson Plan
Measuring the Economy - Gross Domestic Product
(GDP)
- I. Gross Domestic Product (GDP)
- - definition
- - what is Gross National Product (GNP)?
- - how do GDP and GNP differ?
- - uses of GDP
- - economic indicator
- - measure of economic well-being
- - inter-country comparisons
- II. Measuring GDP
- - the expenditure approach
- - Consumption (C)
- - definition
- - what is included?
- - Investment (I)
- - definition
- - what is included?
- - Government purchases (G)
- - what is included?
- - Net Exports (NX)
- - Exports (X)
- - Imports (M)
- - NX = X - M
- - GDP = C + I + G + NX
- - the income approach
- - the relationship of income to output
- - national income (NI) = sum of all resource payments
- - definition of wages, interest, rent and profits
- - reconciling the expenditure and income approaches
- - GDP = C + I + G + NX
- - Net Domestic Product (NDP) = GDP - depreciation
- - NI = NDP - indirect business taxes + net income earned
abroad
- - value added
- - definition
- - the mechanics of computing NI or GDP through sales of goods
and services
- - additional definitions
- - National Income
- - less corporate profits, social security taxes, and net
interest
- - plus transfer payments, personal interest, and dividends
- - equals Personal Income (PI)
- - Disposable Personal Income (DPI) = PI - personal taxes
- - Problems with GDP
- - Inaccuracy
- - Non-market transactions