Transcript What is Gross Domestic Product?

What is Gross Domestic
Product?
Economics 11
Stewart
Where you see the pencil, copy the note!
What did you make?

Do you know what you made at your job last
week?
Last year?
Do your earnings increase or decrease since
last week?
Last year?
GDP is…

Governments, economists, and politicians
want to know what the country’s earnings
were, and whether they are increasing or
decreasing.

The country’s earnings are measured using
GDP
GDP is…
“Gross Domestic
Product measures
the total value at
market prices of all
final goods and
services produced
in Canada over a
period of time.”
Produced in Canada

GDP measures “domestic” output of goods and
services. That is, output from within Canada no
matter who owns the product.

GNP (Gross National Product) calculates
Canadian-owned products no matter where they
are.
Calculating GDP

Expenditure approach – includes the
expenditures of households on consumer
goods, of business people on investment, the
difference between imports and exports, and
government expenditures.
Calculating GDP

Income approach – includes the total amount of
paid wages, rent, interest and profit (4 factors of
production)
(labour, land, capital, and entrepreneur)
Calculating GDP

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Economists prefer to use the “income
approach” because the data is more
accurate.
Governments make both individuals and
businesses keep track of every penny of
income so it can be taxed.