202 lecture 2

ECO 202 Macroeconomics

GDP Gross Domestic Product

The market value of all final goods and services produced in a country in

a given time

GDP Per Capita =

GDP Population

GDP DeflatorWhat something

would sell for

Market ValueOne Apple

plus One Orange

= Three Riyals

AllEverything except...

Stuff you don’t sell

FinalIntermediate

Final

Final

Intermediate

Goods and Services

Goods

Services

ProducedNew Stuff

Does not include the sale of used

goods

Within a Country

Only production

within Saudi Arabia

In a given period of time

Year Y/Y Quarter Q/Q

Annualized: Q x 4

Percentage Change

new number - old number old number

This Year - Last Year Last Year

This Year = 75 Last Year = 60 Percentage Change?

75 - 60 60

15 60

.25 or 25%

How do you calculate

GDP?

GDP =C = Consumption I = Investment G = Government X = Exports M = Imports

GDP =C + I + G + (X - M)

ConsumptionSpending by

households on goods and services, except new housing

InvestmentSpending on capital

equipment, inventories, and structures, including new

housing

GovernmentSpending on goods and services from

local, state, and federal governments.

Net ExportsExports minus

imports

Net ExportsForeigners buying

exports minus domestic residents

buying foreign goods

What is GDP?C = 105 I = 40 G = 25 X = 30 M= 20

What is GDP?C = 105 I = 40 G = 25 E = 30 I = 20

GDP= C + I + G + (X - M) = 105 + 40 + 25 +(30-20) = 105 + 40 + 25 +10 = 180