2024-2025
INTRODUCTION TO MACRO
ECONOMICS SUMMARY
MODULE 2 CHAPTER 26
GDP AND THE MEASUREMENT OF PROGRESS
KH
, GDP: Gross Domestic Product
Definition: GDP is the market value of all finished goods and services produced within a country
in a year.
!"#
GDP per capita:
$%&'()* ! + -%-&./(0%'
The Definition Broken down:
GDP is the market value of all finished goods and services produced within a country in a year:
The economies total output is measured by the market value of the di@erent goods and
services (each at di@erent prices) summed up.
GDP is the market value of all finished goods and services produced within a country in a year:
Di@erence finished good – intermediate good:
Finished goods are goods that are sold to the final user and consumed or held in
personal inventories. Intermediate goods on the other hand are sold to another
firm/entity that processes or bundles it with other inputs into a finished good.
Machinery and equipment used to produce other goods:
Included in the calculation of the GDP is the production of the goods (machinery
and equipment) that are used to produce other goods.
GDP is the market value of all finished goods and services produced within a country in a year:
Goods: Tangible item with a value (the transaction of an item with value provides the
benefit to a party involved)
Services: Provides a benefit to a party without the benefit or transaction being something
tangible.
Historical perspective: evolution from output being the production of tangible goods to a
service economy.
GDP is the market value of all finished goods and services produced within a country in a year:
As the GDP measures the total production of goods and services (including services to
sell goods including those listed below) the following will not be counted when
calculating the GDP:
• Used / Second hand goods (goods are not allowed to be counted more than once.
• Resale of a house
• Stocks and bonds (are not produced goods but rather a claim to a financial asset)
1
INTRODUCTION TO MACRO
ECONOMICS SUMMARY
MODULE 2 CHAPTER 26
GDP AND THE MEASUREMENT OF PROGRESS
KH
, GDP: Gross Domestic Product
Definition: GDP is the market value of all finished goods and services produced within a country
in a year.
!"#
GDP per capita:
$%&'()* ! + -%-&./(0%'
The Definition Broken down:
GDP is the market value of all finished goods and services produced within a country in a year:
The economies total output is measured by the market value of the di@erent goods and
services (each at di@erent prices) summed up.
GDP is the market value of all finished goods and services produced within a country in a year:
Di@erence finished good – intermediate good:
Finished goods are goods that are sold to the final user and consumed or held in
personal inventories. Intermediate goods on the other hand are sold to another
firm/entity that processes or bundles it with other inputs into a finished good.
Machinery and equipment used to produce other goods:
Included in the calculation of the GDP is the production of the goods (machinery
and equipment) that are used to produce other goods.
GDP is the market value of all finished goods and services produced within a country in a year:
Goods: Tangible item with a value (the transaction of an item with value provides the
benefit to a party involved)
Services: Provides a benefit to a party without the benefit or transaction being something
tangible.
Historical perspective: evolution from output being the production of tangible goods to a
service economy.
GDP is the market value of all finished goods and services produced within a country in a year:
As the GDP measures the total production of goods and services (including services to
sell goods including those listed below) the following will not be counted when
calculating the GDP:
• Used / Second hand goods (goods are not allowed to be counted more than once.
• Resale of a house
• Stocks and bonds (are not produced goods but rather a claim to a financial asset)
1
