(Macro) Episode 20: GDP

[N330AA]

Right, i get that you don't count the value of the wheat 3 times, and that only when it is sold as a final good is it counted. How come business investment is counted? For example if American Airlines buys a plane which has a service life of 10,000 flights. Over those 10,000 flights passengers are going to be paying for the plane as part of the service. So could it not be argued that the plane has been counted twice: AA paying for it, and the passengers covering the cost via tickets?

Thanks

[theicyridge]

I have an exam in two days. This is giving me much-needed hope.

[Olewedelfan]

Will you marry me?

[mjmfoodie]

@Olewedelfan Let me check with my husband first...

[zunkfunkt]

@mjmfoodie Sure honey, you can marry him.

[noobking111]

thanks. this helped

[Bandyfoz]

I would say that a better formula at the end would be:

GDP = C + I + G + (X - M)

"M" stands for iMports.

I think it is importand that imports are taken into account as well as exports. So use this formula in the exam it's much better.

[shockerzlee]

Thank you very much! You have put it into simple language that I can actually absorb in to my brain :D

[fadosani]

good approach to make ppl understand...bravo!

[treysparker]

GDP is complete hoax.

It doesnt measure real growth by any means.

Lets assume the Federal Reseve prints 100 trillion, and gives everyone a check in the mail divided equally.

Our GDP would take off like a rocket, but our growth wouldnt be real growth, it would only grow in nomal value not real value, especially if we go into huge debt in order to do so.

Theoretically we could have an infinite national debt, while maintaining a high GDP.

Would one conclude we're well off? OF COURSE NOT!

[gwoppinallday]

@treysparker real GDP is a more comprehensive measure of economic output, it accounts for inflation by valuing all final goods and services produced in the current year at a base year's prices. By holding price levels constant real GDP determines if quantities produced have increased or not. But keep in mind this simplified analysis is only a guide, by no means can it take into account every single factor of an economy, that's why economists try to rely on a multitude of indicators.

[mjmfoodie]

@treysparker Um - did you watch the part about real vs nominal GDP, and the part where the growth figures deal with Real GDP, and not nominal GDP, for reasons that include those that you mention?

[luemas666]

@treysparker

Transfer payments (like the federal reserve cutting everyone a cheque) are not included in GDP, welfare cheques, food stamps, etc are also not included in GDP. The increase to the money supply would most likely cause inflation which would raise nominal GDP but would have a far smaller effect on Real GDP.

[florgamary]

@treysparker it would be offset by inflation

[gmaner61]

@treysparker That's why we have a GDP deflator you dumb-ass, It accounts for inflation. Nothing is as dangerous as a half educated person.

[pun302]

So if a Apple Inc. sells its iphone 4 in China, n the money they collect from consumers would that money benefits chinese economy or U.S. economy??

[danndan6]

so what you are saying is that if more windows get smashed, cars breakdown, anti-depressants are bought and cigarettes are smoked, then this is a good thing? seeing as the purpose of the economy is to satisfy human need, and we only go to work and produce things to satisfy those needs, then satisfying those needs would harm the economy, right? :)

[weddingtornado]

Your video rocks!!! great job :)

[lilcezar9]

AHAH 1 DISLIKE? how could u not like this video

[6264679]

building an extension to a house would that be included in GDP?

[mjmfoodie]

@6264679 As long as it's a "final good or service," it counts.

[salisell]

idk what i'd do with your your creative videos !!!!!!!!!!!

[hardik9616]

simple and to the point THANKS:

[jessyjkn]

i love you!!!!!!!!!!!!!!

[SuperSangfroid]

awesome video. thank you!

[unrivaled37]

THANKYOU SOU MUCH! THIS HELPED ME TOMORROW I HAVE A MACRO TEST :D love you

[mjmfoodie]

:-)

[avakhamooshi]

I love you for posting these lectures. I am watching all of them. You made made a great contribution to the society, God bless you.

[ravniac]

hay, at ~3 min, won't investment by firms is a "derived demand" thus an intermiediate good? thx^^

[joshuroy21]

well explained! thanks :)

[jastinhaha2]

awesome

[ena1490]

OMG!!! Thanks sooo much! I finally get it!