GDP

• • Gross Domestic Product (GDP) is the total market value of all final goods and services produced in a country during a certain time period
• • GDP = Consumption + Investment + Government Spending + (X-M)
• The Expenditure Approach to Measuring GDP: GDP = C + I + G + (X - M):
• • C (Consumption): Total spending by households on goods and services.
• • I (Investment): Total spending on capital goods that will be used for future production, including business investments, residential construction, and changes in inventories.
• • G (Government Spending): Total government expenditures on goods and services.
• • (X - M) (Net Exports): Exports minus imports. Exports add to GDP as they represent spending on a country's goods and services by foreign buyers, while imports are subtracted as they represent spending on foreign goods and services.
• Purpose of tracking GDP:

  1. Measuring Economic Performance
  2. Comparing Economic Output Over Time: Tracks growth, stagnation, or contraction across different periods.
  3. International Comparisons
  4. Formulating Economic Policy
  5. Investment Decisions
  6. Estimating Living Standards
  7. Identifying Economic Problems