CHAPTER 5 MEASURING A NATION’S INCOME
The Measurement of Gross Domestic Product
• GDP: the market value of all final goods and services produced within a country in
a given period of time
• Sum of all incomes OR expenditures (same look at pg 98)
Goods are valued at their market prices, so:
• All goods measured in the same units (e.g., dollars in Canada)
• Things that don’t have a market value are excluded, e.g., housework you do for
• Final goods: intended for the end user
GDP only includes final goods – they already embody the value of the
intermediate goods used in their production.
• GDP includes tangible goods (like DVDs, mountain bikes, beer)& intangible
services (dry cleaning, concerts, cell phone service).
• GDP includes currently produced goods, not goods produced in the past.
• Usually a year or a quarter (3 months)
THE COMPONENETS OF GDP
• To understand how the economy is using its scarce resources study the
composition of GDP amongst various forms of spending
• Four components: