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  • ECON102: Principles of Macroeconomics
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    COURSE INTRODUCTION
    Course Syllabus
    Unit 1: What is Macroeconomics?
    1.1: The Economic Way of Thinking
    What Is Economics, and Why Is It Important?
    Microeconomics and Macroeconomics
    How Economists Use Theories and Models to Understand Economic Issues
    How to Organize Economies: An Overview of Economic Systems
    Hypotheses, Theories, and Models
    1.2: Scarcity and Production Choices
    Choice in a World of Scarcity
    Resources, Scarcity, and Choice
    How Individuals Choose Based on Budget Constraints
    1.3: The Production Possibilities Curve
    The Production Possibilities Frontier and Social Choices
    Objections to the Economic Approach
    The Production Possibilities Curve (PPC)
    1.4: Opportunity Cost
    Opportunity Cost
    1.5: Demand, Supply, and Market Equilibrium
    Demand, Supply, and Equilibrium in Markets for Goods and Services
    More on Demand
    More on Supply
    Market Equilibrium
    Shifts in Demand and Supply for Goods and Services
    1.6: Market Equilibrium
    Changes in Equilibrium Price and Quantity: The Four-Step Process
    The Circular Flow of Income and Expenditures
    1.7: Price Ceilings and Price Floors
    Price Ceilings and Price Floors
    More on Price Ceilings and Price Floors
    Demand, Supply, and Efficiency
    1.8: Labor and Financial Markets
    Labor and Financial Markets
    Demand and Supply in Financial Markets
    The Market System as an Efficient Mechanism for Information
    Unit 1 Assessment
    Unit 1 Assessment
    Unit 2: Gross Domestic Product, Inflation, and Unemployment
    2.1: Defining GDP
    The Macroeconomic Perspective
    Measuring the Size of the Economy: Gross Domestic Product
    Gross Domestic Product
    Adjusting Nominal Values to Real Values
    Tracking Real GDP over Time
    Comparing GDP among Countries
    How Well GDP Measures the Well-Being of Society
    2.2: Defining Business Cycles
    Business Cycles
    2.3: Economic Growth
    The Relatively Recent Arrival of Economic Growth
    Labor Productivity and Economic Growth
    Components of Economic Growth
    Economic Convergence
    Economic Growth Questions
    2.4: Real GDP and Nominal GDP
    GDP Deflator
    Calculating Real GDP with a Deflator Example
    2.5: Defining Inflation
    Inflation
    More on Inflation
    Measuring Changes in the Cost of Living
    Inflation and Price Indexes
    How the United States and Other Countries Experience Inflation
    Hyperinflation
    The Confusion Over Inflation
    Indexing and Its Limitations
    Economic Commentary on the Costs of Inflation
    2.6: Unemployment
    Unemployment
    Patterns of Unemployment
    What Causes Changes in Unemployment over the Short Run
    What Causes Changes in Unemployment over the Long Run
    More on Unemployment
    The Natural Rate of Unemployment
    Unit 2 Assessment
    Unit 2 Assessment
    Unit 3: Aggregate Demand, Supply, and Equilibrium
    3.1: Aggregate Demand
    The Aggregate Supply–Aggregate Demand Model
    3.2: Aggregate Supply
    Building a Model of Aggregate Demand and Aggregate Supply
    Shifts in Aggregate Supply
    Shifts in Aggregate Demand
    Aggregate Demand and Aggregate Supply
    How the AD/AS Model Incorporates Growth, Unemployment, and Inflation
    Keynes' Law and Say's Law in the AD/AS Model
    3.3: Aggregate Supply in the Short-Run and the Long-Run
    Short- and Long-Run AD and AS
    3.4: Short-Run and Long-Run Macroeconomic Equilibrium
    Recessionary and Inflationary Gaps and Long-Run Macroeconomic Equilibrium
    Cyclical Unemployment
    Cost-Push Inflation
    Macroeconomic Viewpoints
    Unit 3 Assessment
    Unit 3 Assessment
    Unit 4: Money, Banking, and Monetary Policy
    4.1: Money
    Money and Banking
    Measuring Money: Currency, M1, and M2
    The Role of Banks
    4.2. Creation of Money
    How Banks Create Money
    What Is Money?
    Fractional Reserve Banking
    Weaknesses of Fractional Reserve Lending
    4.3: Structure and Powers of the Federal Reserve System
    Monetary Policy and Bank Regulation
    Bank Regulation
    How a Central Bank Executes Monetary Policy
    Monetary Policy
    Monetary Policy and the Federal Reserve
    Monetary Policy and Economic Outcomes
    Pitfalls for Monetary Policy
    The Federal Reserve System
    The Fed Today
    4.4: Financial Markets
    Exchange Rates and International Capital Flows
    Demand and Supply Shifts in Foreign Exchange Markets
    Macroeconomic Effects of Exchange Rates
    Exchange Rate Policies
    More on Exchange Rates
    Interest as Rent for Money
    Money Supply, Money Demand, and Interest Rates
    Bond Prices and Interest Rates
    Financial Speculation
    Unit 4 Assessment
    Unit 4 Assessment
    Unit 5: Fiscal Policy
    5.1: Fiscal Policy
    Government Spending
    Taxation
    Federal Deficits and the National Debt
    Using Fiscal Policy to Fight Recession, Unemployment, and Inflation
    Automatic Stabilizers
    Practical Problems with Discretionary Fiscal Policy
    The Question of a Balanced Budget
    5.2: The Impact of Government Borrowing
    How Government Borrowing Affects Investment and the Trade Balance
    Fiscal Policy and the Trade Balance
    How Government Borrowing Affects Private Saving
    More on Government and Fiscal Policy
    Fiscal Policy, Investment, and Economic Growth
    Tax Lever of Fiscal Policy
    5.3: Inflation and Unemployment
    Phillips Curve
    Changes in the AD-AS Model and the Phillips Curve
    Comparing Monetary and Fiscal Policy
    5.4: The Keynesian Perspective
    The Keynesian Perspective
    The Building Blocks of Keynesian Analysis
    The Phillips Curve
    The Keynesian Perspective on Market Forces
    5.5: The Neoclassical Perspective
    The Neoclassical Perspective
    The Policy Implications of the Neoclassical Perspective
    Balancing Keynesian and Neoclassical Models
    An Outline of the U.S. Economy: Monetary and Fiscal Policy
    Unit 5 Assessment
    Unit 5 Assessment
    Unit 6: International Trade and Finance
    6.1: International Trade and Capital Flows
    International Trade and Capital Flows
    International Capital Flows and Trade Balance
    Trade Balances in Historical and International Context
    Trade Balances and Flows of Financial Capital
    The National Savings and Investment Identity
    Pros and Cons of Trade Deficits and Surpluses
    The Difference between the Level of Trade and the Trade Balance
    Balance of Payments: Current Account
    6.2: Macroeconomic Policy around the World
    Macroeconomic Policy around the World
    Improving Countries' Standards of Living
    Causes of Global Unemployment
    Causes of Global Inflation
    Balance of Trade Concerns
    6.3: International Trade
    International Trade
    When a Country Has an Absolute Advantage in All Goods
    Intra-industry Trade between Similar Economies
    The Benefits of Reducing International Trade Barriers
    6.4: Globalization and Protectionism
    Globalization and Protectionism
    How International Trade Affects Jobs, Wages, and Working Conditions
    Arguments Supporting Restricting Imports
    How Governments Enact Trade Policy: Globally, Regionally, and Nationally
    Unit 6 Assessment
    Unit 6 Assessment
    Study Guide
    ECON102 Study Guide
    Course Feedback Survey
    Course Feedback Survey
    Certificate Final Exam
    ECON102: Certificate Final Exam
    Saylor Direct Credit
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Table of contents

  • Gross Domestic Product
  • Parsing Gross Domestic Product
  • More on Final and Intermediate GDP contributions
  1. ECON102: Principles of Macroeconomics
  2. Unit 2: Gross Domestic Product, Inflation, and Unemployment
  3. 2.1: Defining GDP
  4. Gross Domestic Product

Gross Domestic Product

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Watch these videos to analyze the definition of gross domestic product (GDP) and how this definition avoids double-counting and the effects of price changes.

Gross Domestic Product

 

 

Source: Mary J. McGlasson, https://www.youtube.com/watch?v=yUiU_xRPwMc&list=PLF2A3693D8481F442&index=20
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

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Saylor Academy © 2010-2025 except as otherwise noted. Excluding course final exams, content authored by Saylor Academy is available under a Creative Commons Attribution 3.0 Unported license. Third-party materials are the copyright of their respective owners and shared under various licenses. See detailed licensing information. Saylor Academy®, Saylor.org®, and Harnessing Technology to Make Education Free® are trade names of the Constitution Foundation, a 501(c)(3) organization through which our educational activities are conducted.