Unit 9. Gross Domestic Product

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Unit 9. Gross Domestic Product

• IES Lluís de Requesens (Molins de Rei)?
• Batxillerat Social
• Economics (CLIL) Innovació en Llengües
  Estrangeres
• Jordi Franch Parella

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GDP

• Gross Domestic Product is the market value of all
  final goods and services produced within a
  country in a year
• Production Income Expenditure
• Whereas microeconomics is the study of how
  families and firms make decisions and interact in
  markets, macroeconomics is the study of the
  economy as a whole

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GDP

• What is not included in GDP?
• Do it yourself activities or items produced at
  home are not included
• Illegal activities are excluded (drugs ...)?
• The better quality of computers, for instance, is
  not considered
• Public services don't have market prices and must
  be valued at the cost of providing them
  (education, health care ...)?
• Negative externalities (pollution) or the
  production of military weapons

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GDP (production, income)?

• GDP (production) ? Added Value
• GDP (income)?
• Market prices Factor cost IVA Subsid.
• Domestic National rfen rfne
• Gross Net depreciation
• NNP wages interests rents profits
• Personal Income NNP IS Reserves Cotit SS
• Disposable Personal Income Personal Income
  IRPF Subsidies

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GDP (expenditure)?

• Y C I G X M
• Consumption (C) is the spending by families on
  goods and services
• Investment (I) is the spending on capital
  equipment, inventories and new housing
• Government spending (G) is the spending on goods
  and services by the government
• Exports (X) are international sales
• Imports (M) are international purchases

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GDP (Real versus Nominal)?

• Nominal GDP values goods at current prices
• Real GDP values goods at constant prices
• GDP deflator Nominal GDP / Real GDP
• Real GDP Nominal GDP / Deflator
• The deflator is a measure of the overall increase
  in the prices of a society

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GDP and well-being

• GDP is a measure of the economic well-being of a
  society
• GDP per person tells us the average income of a
  person in the country
• Higher GDP per person indicates higher standards
  of living
• However, GDP is not a perfect measure of
  happiness or the quality of life
• The lack of pollution, the leisure, volunteer
  work is not included in the GDP