The meaning and measurement of some of the most important
macroeconomic statistics:
Gross domestic product (GDP) & Gross National Product (GNP)
The consumer price index (CPI) & the Retail Price Index (RPI)
The unemployment rate.
Gross Domestic Product: Expenditure and Income
Total expenditure on domestically-produced
final goods and services.
Total income earned by domestically-located
factors of production.
Value added:
The value of output minus the value of the intermediate goods used to
produce that output.
Value of output- value of intermediate good= Value Added
Final goods, value added, and GDP
GDP = value of final goods produced
= sum of value added at all stages of production.
The value of the final goods already includes the value of the intermediate
goods,
so including intermediate and final goods in GDP would be double
counting.
, The expenditure components of GDP
consumption, C
investment, I
government spending, G
net exports, NX
An important identity:
Y = C + I + G + NX
Y = value of total output
C+I+G+NX = Aggregate expenditure
Consumption (C)
Definition: The value of all goods and services bought by households.
Includes:
durable goods
last a long time
e.g., cars, home appliances
nondurable goods
last a short time
e.g., food, clothing
services
intangible items purchased by consumers
e.g., dry cleaning,
air travel
Investment (I)
Spending on capital, a physical asset used in future production
Includes:
Business fixed investment
Spending on plant and equipment
Residential fixed investment
Spending by consumers and landlords on housing units
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