# 19.1 Measuring the size of the economy: gross domestic product  (Page 3/29)

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When thinking about the demand for domestically produced goods in a global economy, it is important to count spending on exports—domestically produced goods that are sold abroad. By the same token, we must also subtract spending on imports—goods produced in other countries that are purchased by residents of this country. The net export component of GDP is equal to the dollar value of exports (X) minus the dollar value of imports (M), (X – M). The gap between exports and imports is called the trade balance    . If a country’s exports are larger than its imports, then a country is said to have a trade surplus    . In the United States, exports typically exceeded imports in the 1960s and 1970s, as shown in [link] (b).

Since the early 1980s, imports have typically exceeded exports, and so the United States has experienced a trade deficit    in most years. Indeed, the trade deficit grew quite large in the late 1990s and in the mid-2000s. [link] (b) also shows that imports and exports have both risen substantially in recent decades, even after the declines during the Great Recession between 2008 and 2009. As noted before, if exports and imports are equal, foreign trade has no effect on total GDP. However, even if exports and imports are balanced overall, foreign trade might still have powerful effects on particular industries and workers by causing nations to shift workers and physical capital investment toward one industry rather than another.

Based on these four components of demand, GDP can be measured as:

Understanding how to measure GDP is important for analyzing connections in the macro economy and for thinking about macroeconomic policy tools.

## Gdp measured by what is produced

Everything that is purchased must be produced first. [link] breaks down what is produced into five categories: durable goods , nondurable goods , services , structures , and the change in inventories . Before going into detail about these categories, notice that total GDP measured according to what is produced is exactly the same as the GDP measured by looking at the five components of demand. [link] provides a visual representation of this information.

Components of u.s. gdp on the production side, 2014
Components of GDP on the Supply Side (in trillions of dollars) Percentage of Total
Goods
Durable goods $2.9 16.7% Nondurable goods$2.3 13.2%
Services $10.8 62.1% Structures$1.3 7.4%
Change in inventories $0.1 0.6% Total GDP$17.4 100%

Since every market transaction must have both a buyer and a seller, GDP must be the same whether measured by what is demanded or by what is produced. [link] shows these components of what is produced, expressed as a percentage of GDP, since 1960.

how discrib the rural development and their four stages
bro History ka question yahaan nhi puchne ka 🤣
Tenzin
ye economics se related ha
Sheikh
1..traditional stage..no science and technology is applied hence poor productionuu.2..the take off stage..some development strategies are initiated eg transport system is improved but the traditional cultural belief still remain .3..the prematurely stage..technological methods of production are appl
President
applied leading to higher GDP..4..stage of mass consumption..
President
What is Easiest Formula For National Income?
national income/ agrrigate net value
Sheikh
what do you mean by the supply of goods
supply of good refer to the total unit of production which is ready to sell at a given price
Tenzin
what is implicit cost
Yeah
MOHAMED
any cost that has already occurred but not necessarily shown or reported as a separate expense.
President
The links don't seem to be working
what is taxonomy
how to interprets elasticity
what is demand curve
Joseph
It is the graphical representation of quantity demand of a commodity?
Kofi
it is the graphical representation of price and quantity demanded of a commodity
Obaa
what is the difference between positive economics and normative economics.
It said that positive economics studies the facts, but normative one focus on ought to be.
in another words normative economics focuses on what the fair situation is.
positive economics: wages are 10$per hour. normative economics: wages should be 25$ per hour.
what is choice
what is indifference curve
It is an alternative combination of consumption of two goods which gives equal level of satisfaction.
Shujjat
good morning guys.. I am Lawrence from Nigeria.. trust am welcome here..
Lovely morning bro... Welcome 💕
Kosiso
ur most welcome lawrence
Kun
Welcome back to another session,happy Friday morning
good morning guys I'm Oumar Kromah from Côte d'ivoire am I welcome here
Oumar
lovely morning bro welcome
Malak
i dont understand on economics
Noor
i m from pakistan
Noor
mashallah
Tanveer
I am from Nepal
OP
i m Pakistan
Malak
Am Gabriel from Ghana
Kwame
hmmm
Noor
are you ecnomist?
Noor
Am Eben Paak from Ghana
Eben
Okay.. Nice meeting us
Kosiso
l am James Borbor from Liberia
jackie
I am a researcher
jackie
you all are ecnomost
Noor
ohh nice
Noor
re search on economy
Noor
what is demand
yes
Malak
what is an opportunity cost?
next best alternative cost...
suresh
Meaning of Economics
It can be define as the practical science that studies human relationship between End's and scare means which have alternative uses in all aspect of human life
Kosiso
what's the meaning of pure and impure
Levinel
Pure is free from immoral behavior or quality,Impure not clean dirty,filthy containing something that is in pure