Econ: Gross Domestic Product



Gross Domestic Product (GDP) is the primary measure of a nation’s macroeconomic performance, so it is important to understand how GDP is calculated and to address cautions in its use. GDP is the value of all final products produced in a country in one year. GDP focuses on production within the United States, regardless of where in the world the company’s headquarters are located, so Toyotas produced in the United States are counted in the GDP of the United States, not Japan. GDP does not include intermediate goods, purely financial transactions, secondhand sales, household production (cooking one’s own food, mowing one’s own yard), or illegal activity.


Homework:
13.2 How Do Economists Measure the Size of an Economy (read pp.252-256)

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