WHAT IS GDP?

Gross Domestic Product (GDP) is the total monetary or

market value of all the finished goods and services
produced within a country's borders in a specific time
period.
TWO WAYS TO MEASURE GDP:

Gross Domestic Product (GDP) is the sum of all income or

all spending.
1) Income Approach : Add up all the income
2) Expenditure Approach : Add up all the spending
INCOME APPROACH:

Type of Income :
1) Land : Rent
2) Labour : Wages
3) Capital : Interest
4) Entrepreneur : Profit
Formula :
GDP = Total Income
EXPENDITURE APPROACH :

Types of Expenditure :
1) Consumption(C) : Households
2) Investments(I) : Firms
3) Government(G) : Government Spending
4) Foreign Sector(X-M) : Exports – Imports
Formula :
GDP : C + I + G + (X-M)
MEASURING GDP – INCOME AND
EXPENDITURE APPROACH :