AP Macroeconomics / Unit 2: Economic Indicators and the Business Cycle
2.1 The Circular Flow and GDP
Notes
GDP: market value of all final goods and services produced within a country in a year.
- Expenditure approach: $GDP=C+I+G+X_N$.
- Not counted: intermediate goods, used goods, financial transactions, transfer payments.
Practice
Which is counted in GDP?
A final service produced this year.
In $GDP=C+I+G+X_N$, a firm buying new machinery counts as:
Investment.
The circular flow shows households supplying firms with:
In the resource market.
Ready for more? Take the Unit 2 test.