Macroeconomics GDP Total amount of a country’s income is related to GDP. That contributed to the economy. But prostitution money is not allowed for GDP money. If anyone is unemployed then that money will not be added to GDP Income, Expenditure, And the Circular Flow There are 2 ways of viewing GDP in the whole income of everyone’s economy.
the economy’s output of goods and services for economy thinks as a whole and income must equal expenditure.
the flow dollars of the economy To compute the total amount of money for different goods and services, the national income accounts use market
Thus, if ·inventories depend on a specific purpose. But if money is spoiled then GDP will unchanged. When the goods are finally sold out of inventory, they are considered used goods (and are not counted). Also, intermediate good is not counted in GDP.
Value Final Reason:
Value of goods included with market Value added of a firm equals the value of the firm’s output less the amount of intermediate goods the firm purchases.
Some goods are not selling in the marketplace and therefore don’t have market prices. It can change over time either because there is a change in the amount (real value)of goods and services or a change in the prices of those goods and services. Hence, nominal GDP Y = P ´ Y when P is price and y is real output- and remember we use output and GDP interchangeably. Real GDP or, y = Y¸P is good and service measured using a constant set of prices. This distinction between real and nominal can also be applied to other monetary values, like wages. Nominal (or money) wages can be denoted by W and decomposed into a real value (w) and a price variable (P).
Hence, W = nominal wage = P • w w = real wage = w/P This conversion from nominal to real units allows us to eliminate the problems created by having a measuring stick (dollar value) that essentially changes length over time, as the price level changes. Real GDP in 2002.
measures the current dollar value of the output of the economy. Real GDP measures output valued at constant prices. The GDP deflator also called the implicit price deflator for GDP, measures the price of output relative to its price in the base year. It reflects what’s happening to the overall level of prices in the economy.
Investment spending by businesses and households Consumption spending by households Government purchases of goods and services. This is called the national income accounts identity.
Payments from Abroad -Factor Payments to abroad GDP will measure the total income that will produce domestically
Measure earned by nationals (residents of a nation). To obtain the NNP we depreciate capital- the amount of economy. NNP= GNP – Depreciation 12 Let’s see how the CPI would be counted in our apple and orange economy. The index tells how much it costs to buy 3 apples and 2 oranges in the current year relative to how much it cost to buy the same basket of fruit in 2002.
The GDP deflator measures the prices of good products, whereas the CPI measures the prices of only goods and services bought by consumers. Thus, if an increase in the price of goods government show up GDP deflation but will not in CPI Also, another difference is the GDP deflator only for those good and service produced domestically
Imported products are not part of the GDP and it shows up in the GDP deflator.
GDP-CPI Unemployment Rate National income accounting Stocks and flows Value added Imputed value Nominal versus real GDP, GDP deflator
Analysis: If anything is contributed with money transaction that is related to GDP. Some parts are not added to GDP because there have no money transactions. As I said prostitution money is not allowed in GDP also not for macroeconomics concept. Macroeconomics is acted as a whole which is so difficult part needs to add the whole money of the economy.
It is not easy to control macroeconomics easily cause it talks about wider society. The USA is talking about Macroeconomics part because it is a developed country. But those country is not developed or developing they are using the microeconomics concept of GDP. Macroeconomics talks totally differently and it may arise many problems. Control of this economy is so tough. Like if the government spread any negative talk then it will hamper the total economy. But in micro, it has no hamper because it is talk about a small economy. If the economy is getting profits then It will be added to the GDP but if it gets lost it will affect macroeconomics and it hampers a lot. Sometimes it is not counted as GDP. It has a limited amount and if it is not exceeded then it will not be counted as a macroeconomics whole GDP.