GDP/GNP

GDP

- This is the market value of all final goods and services within a country's border within a given year.

GNP

- It is the total value of all final goods and services by citizens of that country on its land or a foreign and.

INCLUDED IN GDP:

C- Personal consumption expenditures (65%).
IG- Gross private domestic investment (17%).
      * Factory equipment, factory equipment maintenance, construction of housing, unsold inventory of                    products built in a year.
G- Government spending (20%).
XN- Net exports (-2%).
        * (Exports - Imports).
Formula: C+IG+G+XN.

WHAT'S NOT INCLUDED IN GDP.

1) Intermediate Goods: goods that require further processing before they are ready for final use
    * Parts of a car.
2) Used/ Secondhand Goods.
    * To avoid double counting.
3) Purely Financial Transactions(stocks and bonds).
4) Illegal Activities(drugs).
5) Unreported Business Activity(unreported tips).
6) Transferred Payments.
     * Public(social security, welfare, VA).
     * Private (scholarship, trust funds).
7) Non-Market Activity.
     * Volunteer work, babysitting, any work performed for self.