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Gdp c i g x m where c equals consumption i equals

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GDP = C + I + G + ( X - M ) where C equals consumption, I equals investments, G equals government, X equals exports and M equals imports. It must be remembered that the GDP measures only value of new, domestic production. It also uses the market values (selling price) of goods and services. GDP measures only the final goods produced . For example, glass sold to automobile plants or hardware stores is not counted. The glass gets counted in the final sale of a car or a windowpane. The individual components of GDP include: Consumption . This component of GDP refers to consumer spending. There are three categories for consumer spending: 1) durable goods, 2) non-durable goods, and 3) services. Consumers account for two-thirds of all economic activity. Investment Spending . This is spending by the business sector on finished goods and services. There are two categories: 1) purchase of new capital for production, and 2) inventories, which are goods already produced but unsold. Government Spending . Spending by the government for finished goods and services. This includes federal, state, and local governments. Government accounts for about 18% of total purchases. Exports . This category refers to goods and services sold to other countries. Currently this category is negative, because we import more from other countries than they buy from us (trade deficit). All statistics have their faults. Using gross domestic product as an evaluative tool for our economy has its problems. One of the first problems associated with gross domestic problem is how to account for the effect of inflation. This brings up the difference 5
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ISS 225 – Power, Authority, Exchange Economic Order between Real and Nominal gross domestic product. Nominal GDP measures the current value (today’s prices) of all new domestically produced final goods and services. Real GDP measures the value of current total production using fixed prices (former prices of a base year). A second problem in using GDP to measure the nation's economic performance is that it doesn't take into account goods and services not for sale, such as illegal transactions such as drugs, and work for no pay, such as housework. A third problem is that GDP doesn't say anything about how the goods and services are distributed amongst the population. Other shortcomings of using GDP are that quality changes are not reflected, leisure is not considered, and environmental and other social costs are also not considered. Per capita real GDP is a more accurate measurement of how countries are doing relative to one another. It is easy to say that the United States is doing better than Japan, which has the second largest GDP, but that is because the United States has over twice the population of Japan. To calculate per capita real GDP, all that is needed is to divide the gross domestic product of a country by its population. The example below is for per capita real GDP in the United States for 1994.
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