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Calculating a Country’s GDP

Calculating a Country’s GDP. Mr. Odren. Gross Domestic Product (GDP). GDP is the dollar value of all goods and services produced within a country’s borders in one year. GDP Formula = C + I + G + (Exports-Imports ) Export – Import can also be called Trade Balance. Formula breakdown.

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Calculating a Country’s GDP

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  1. Calculating a Country’s GDP Mr. Odren

  2. Gross Domestic Product (GDP) • GDP is the dollar value of all goods and services produced within a country’s borders in one year. • GDP Formula = C + I + G + (Exports-Imports) • Export – Import can also be called Trade Balance

  3. Formula breakdown • C = Consumption: how much money people spend (consumer spending) • I = Investment: how much money businesses spend • G = Government: how much money the government spends • Exports = the dollar value of goods/services that the country has sold to other countries • Imports = the dollar value of goods/services bought by a country from other countries.

  4. GDP Per Capita • Per Capita = Per Person • How do you determine GDP Per Capita? = GDP divided by the population of the country • Provides indication of how the average person in the country is “doing” economically • The higher the GDP per capita, the higher the standard of living for each person in that country.

  5. Analyzing Country’s GDP Example • Millervania is a 3rd world country that is led by a very mean King. It has mountains in the East and farmland in the West. It is currently fighting a civil war against the Taliban so the economy is in bad shape. • Many people have fled the country and the population is only about 5 million. The country makes most of its money in the mining industry, coal, diamonds, silver and other resources. They export about $15 billion in mining resources. Unfortunately, they have to import a lot of goods and spend $10 billion importing goods and services from other countries. The agriculture in Millervania is mostly wheat, but many farmers along the border with Afghanistan illegally farm and sell Poppy plants to manufacture opium. This is estimated at over $50 billion. • The consumers in Millervania spend about $100 billion in one year. Business investment spending is mostly in the mining industry and they invested $200 billion back into the country. The Government is in bad shape fighting a civil war and could only spend $25 billion to stimulate economic growth. • What is Millervania GDP? (Hint: C+I+G+ (export – import) • What is Millervania GDP per capita? • What is the trade balance?

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