GDP Notes GDP The total market value of all new final goods and services produced within

n a nations border in a year. Used to measure the size of an economy, wealth of nations, and overall well-being 1) New goods and services: the year made not sold. 2) Price sold if the product isnt sold, then the cost to make it is what is counted 3) The final good, intermediate goods are not included. 4) Made within a nations borders. GDP = C+I+G+(X-M)= (Consumption)+(Investment)+(Government Services)+(Exports-Imports) Three types of investment: Fixed/Planned: Business spending on capital goods Unplanned: Goods made but not sold New residential construction GDP can increase without new production if the price fluctuates for an existing product Nominal means that it hasnt been adjusted for inflation; it is just the GDP at face value Real accounts for inflation Pick a base year that serves as a metric to find the GDP for all other years

Real GDP= Use year 2 quantities with year 1 (base) prices to find RGDP for year 2 GDP per capita= GDP/Population measures the standard of living and the wealth of nations