2. What is
GDP?
Gross domestic product (GDP) the
market value of all final goods and
services produced within a country in
a given period of time
3. What are the
Components ofGDP?
Personal
Consumption
Expenditures
Government
Spending
Net Exports of
Goods and
Services
Business
Investment
4. Government
purchases
spending on
goods and
services by local,
state, and federal
governments.
Net exports - spending
on domestically
produced goods by
foreigners (exports)
minus spending on
foreign goods by
domestic residents
(imports)
5. Consumption is
spending by
households on
goods and
services, with the
exception of
purchases of new
housing.
Investment -
spending on capital
equipment,
inventories, and
structures, including
household purchases
of new housing.
7. Interesting
question
A pound of caviar contributes more to GDP because it
costs more than a pound of hamburger. The contribution
to GDP is measured by market value and the price of a
pound of caviar is much higher than the price of a pound
of hamburger.
Which contributes more to GDP the production
of a pound of hamburger or the production of a
pound of caviar? Why?
