GDP and GNP

• Business - organization producers goods and services.
• Household - person or group of people that show income
• Represents transactions - in an economy by flows around a circle.

Gross Domestic Product (GDP)

• Total value of all final goods and services produced within a countries boarders within a given year.
•  Includes: All production and income earned within the U.S. and foreign users. It excludes production outside of U.S. even by Americans.

1. C- Consumption:67% of U.S. economy purchase of finished goods and services.
2. Ig- Gross Private Domestic Investment: Deals with factory equipment, construction of housing, unsold inventory built within that year and factory equipment maintenance. 18% of economy.
3. G- Government Spending: 17% of economy.
4. Xn- Net Exports: (exports - imports) -2% of economy.

Gross National Production (GNP)

• Total value of all final goods and services produced by Americans in a given year.
• Includes: Production or income earned by Americans anywhere in the world.
• Does not include production by non-Americans even in the U.S.

Formula
 C + Ig + G + Xn = GDP