GDP(gross domestic product)

the total value of all final goods or services product in a

country during one year  GDP growth rate is an
important indicator of the economic performance of a
country.GDP is used for many purposes but the most
important is to measure the overall performance of an
economy
GDP=C+I+G+Xn
Trade items are not involved in GDP
GNP
GNP measures the monetary value of all the finished
goods and services produced by the country’s factors of
production irrespective of their location. Only the
finished or final goods are considered as factoring
intermediate goods used for manufacturing would
amount to double counting. It includes taxes but does not
include subsidies.
The formula to calculate the components of GNP is
Y = C + I + G + X + Z. 
Types of GDP
NDP
Equals the total final output produced with in a nation
during a year where output includes net investment or
gross investment less depreciation
Formula : NDP=GDP-depreciation
Gross nation product is the total final output produced
with inputs owned by the resident of a country during a
year
NNP
Net National Product (NNP) in an economy is the GNP
after deducting the loss due to depreciation.
NNP = GNP - Depreciation
 NNP at Factor Cost:It is the value of NNP
when the value of goods and services is taken
at the production cost.
National income:The National income is the total
amount of income accruing to a country from economic
activities in a years time. It includes payments made to
all resources either in the form of wages, interest, rent,
and profits.
The progress of a country can be determined by
the growth of the national income of the country
Disposable income
Disposable income is total personal income minus
personal current taxes. Disposable income is net income.
It's the amount left over after taxes.
DPI=income-taxes
personal income is the amount of money collectively
received by the inhabitants of a country. Sources
of personal income include money earned from
employment, dividends and distributions paid by
investments, rents derived from property ownership, and
profit sharing from businesses.
Percapita income
 measures the average income earned per person in a
given area (city, region, country, etc.) in a specified year.
It is calculated by dividing the area's total income by its
total population.
Formula national income/ population=percapita income
Real GDP Vs Nominal GDP
1. Real GDP
2. Nominal GDP
Real GDP Nominal GDP
Measure the value of all Measure the value of all
good and services produces
expressed in the prices of
some base year
Real GDP represents the
change in volume of total
output after prices changes
are removed
Real GDP=GDPt-GDPt-
1/GDPt-1
good and services produces
expressed in current year
Nominal GDP is calculated
using changing prices
C+I+G+(X-M)=Nominal
GDP

Actual GDP Vs Potential GDP

Actual GDP Potential GDP

How to measure inflation pg:402

to measure the inflation we have to measure price index
A price index is a measure of average level of prices or
inflation donates a rise in the general level of prices.
Inflation=Pt-Pt-1/Pt-1 (100)
Types of price index
I. CPI
II. GDP deflator
III. PPI
CPI: Price consumer index : measure of the over all
price level is the consumer price index
GDP deflator: price of good and services produced in
country (consumption, investment, G,Xn)rather than of
single component
PPI: Producer price index: it measure the level of prices
at the whole sale or producer stage .it is based on over
800commodity prices , including prices of food ,
manufactured products and mining products.