Think Like An Economist S E25: Gross Domestic Product - Adding Up Everything We Do
5 snips
Jan 12, 2021 AI Snips
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Domestic Production Only
- GDP includes only production that occurs within the country's borders.
- Imports are subtracted because they are counted in domestic spending but produced abroad.
Nominal Versus Real GDP
- Nominal GDP uses current prices and rises with inflation even if output doesn't change.
- Real GDP adjusts for inflation so we can compare the quantity of goods and services over time.
The Three Faces Of GDP
- GDP equals total production, total spending, and total income simultaneously.
- Breaking spending into consumption, investment, government, and net exports shows who buys the output.