Tuesday, December 21, 2010

Post 11: Caclulating GDP

The basic formula for calculating the GDP is:

·         C - Consumer Spending
·         I - Investment made by industry
·         E - excess of exports over imports
·         G - government spending
Add them all together to = Y - the Gross Domestic Product (GDP)


1)    Final Goods - If a log was made into timber which was made into a chair, Only the chair will be counted in the GDP.
2)    Imputed Values - Logical or implicit value that is not recorded in any accounts.
3.) Market Price- a security’s last reported sale price (if on an exchange) or its current bid and ask prices (if over-the-counter); i.e. the prices as determined dynamically by buyers and sellers in an open market.

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