GDP Lesson

Gross Domestic Product

How to measure what a country produces

This is the dollar value of all final goods and services produced within a country's borders in a given year

Gross: Total
Domestic: Within the country's borders
Product: Production of final goods/services

Gross Domestic Product

New Clothing

New Vehicles

Food

Salon Services

​Final Goods and Services are counted as part of GDP

​This is called the Expenditure Method. It looks at how much is spent on each category.

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Calculating GDP

60 - 70 % of GDP
$ value of goods and services purchased in the current year
Examples: Food, haircuts, clothing

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Consumption (Consumers)

10 - 15% of GDP
Businesses buying machines, research, inventory.

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Investment (Business Investment/Spending)

15 - 20% of GDP
Examples: Roads, schools, military, parks, etc

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Government Spending (Federal, State, and Local)

5-10% of GDP
Exports: US products sold to other countries
Imports: Products we buy from other countries

Net Trade (Exports - Imports)

Multiple Choice

You buy an new iPhone made in China.

• Consumer Spending

• Business Investment

• Government Spending

• Exports

• Imports

Multiple Choice

General Moters buys a new factory to build electric vehicles.

• Consumer Spending

• Business Investment

• Government Spending

• Exports

• Imports

Multiple Choice

You buy new Nike sneakers.

• Consumer Spending

• Business Investment

• Government Spending

• Exports

• Imports

Multiple Choice

The United States sells natural gas to Poland.

• Consumer Spending

• Business Investment

• Government Spending

• Exports

• Imports

Multiple Choice

The federal government buys new tanks.

• Consumer Spending

• Business Investment

• Government Spending

• Exports

• Imports

Types of Products

Products consumed in a relatively short period of time.

Nondurable Goods

Products tend to last more than a year.

Durable Goods

Categorize

Options (8)

Refrigerator

Oven Range

Truck

Washer

t-shirt

Mountain Dew

Halloween Candy

Ice Cream Cones

Determine if each of the following items would be considered "durable" or nondurable" goods.

Durable Goods

Nondurable Goods

Cotton used in clothing

Chocolate used in candy

Steel used in machines

Wood used in houses

​Intermediate Goods: NOT INCLUDED!

Multiple Choice

Which of the following would be considered an intermediate good?

• A Big Mac at McDonald's

• Levi's jeans at the Gap

• iPhone at the Apple Store

• Coffee Beans at Dunkin

Categorize

Options (8)

Pepsi at Taco Bell

Apple iPhone

CV Eagles sweatshirt

Burger King Whopper

Sugar in Pop Tarts

Coffee beans at Starbucks

Flour at Dunkin

Steel in a Ford F-150

Organize these options into the right categories

Final Goods

Intermediate Goods

Products not produced within the year

Used

Illegal activities or leisure activities

Non-Market

Gifts, or nothing produced

Transfer

Paper assets - stocks, bonds

Financial Transactions

​Items NOT included in GDP

Categorize

Options (10)

Bought tacos at Taco Bell

Paid for a haircut

UPS buys new trucks

Cumberland Valley builds a new elementary school

You buy a Halloween costume at Target

You receive a check from your grandmother for your birthday

You mow your lawn

You buy a Halloween costume at Goodwill

Your dad buys 10 shares of stock in Gamestop

You lend $10 to your sister

Organize these options into the right categories

Items included in GDP

Items NOT INCLUDED in GDP

Leisure activities, income distribution, barter, and DIY

Positive externalities, nonmonetary transactions, and social well-being

​What doesn't GDP show?