Gross domestic product (GDP) refers to the market value of all final goods and services produced within a country in a given period

Meaning and goals of macroeconomic.

Macroeconomics- «macros»-large + «economics»

Is a branch of economics dealing with the performance, structure,behaviour and decisions-making of the whole economy.

Includes: national, regional, global economy

Goals:

-full-employment

-stable prices

-economy growth

-balance trade

-income distribution

2. Gross National Product / Gross Domestic Product.

The Gross National Product (GNP) is the total dollar value of all final goods and services produced for consumption in society during a particular time period. Its rise or fall measures economic activity based on the labor and production output within a country.

Gross domestic product (GDP) refers to the market value of all final goods and services produced within a country in a given period.

Types of GDP:

Nominal GDP - money value of goods and services produced in a year.

Real GDP – is adjusted for price level changes.

Methods for measuring GDP:

Expenditure approach:

- All expenditure incurred by individual during 1 year

GDP (Y) is a sum of Consumption (C), Investment (I), Government Spending (G) and Net Exports (X – M).

Y = C + I + G + (X − M)

A fully equivalent definition is that GDP (Y) is the sum of final consumption expenditure (FCE), gross capital formation (GCF), and net exports (X – M).

Y = FCE + GCF+ (X − M)

Income approach:

- Sum total of incomes of individual living in a country during 1 year

Total factor income is also sometimes expressed as:

Total factor income = Employee compensation + Corporate profits + Proprietor’s income + Rental income + Net interest

Yet another formula for GDP by the income method is:

GDP = R + I + P + SA + W

R: rents
I: interests
P: profits
SA: statistical adjustments (corporate income taxes, dividends, undistributed corporate profits)
W: wages
Note the mnemonic, "ripsaw".

3. GDP: expenditures and income approaches.

Methods for measuring GDP

· Expenditures approach(метод по-расходам)

GDP=C+I+G+Xn

C-personal consumption expenditures(потребление)

Расходы со стороны домашних хозяйств, со стороны населения

I-gross private investment(валовые инвестиции)

G-government purchases(правительственные закупки)

Xn-net export(чистый экспорт) (экспорт минус импорт)

· Income approach(метод по доходам)

GDP includes:

Wage and compensation of imployees

Rents

Interest

Corporate profits and proprietors’ income

Indirect business taxes(косвенные налоги)

Depreciation(amortization) амортизация-

GDP=W+R+I+Pr+T+A