GDP Measurement of the Economy

It is important to distinguish GDP from Gross National Product (GNP). GDP "represents the dollar value of all the goods and services produced"--but it counts only those produced within the nation's borders (Kacapyr 9). It includes these factors without regard to whether they were produced by the nation's own citizens and firms or by foreign nationals and firms operating within the nation. But GDP excludes those goods and services produced by its citizens and firms outside its boundaries. The GNP, on the other hand, bases its totals on the goods and services produced by the nation's citizens and firms wherever they are. The GNP does not, however, include those goods and services produced by foreign firms and foreign nationals operating within the nation's borders. In the United States, though GNP was employed for decades, the GDP was adopted in

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ts of those final goods and services purchased by private individuals as well as "operating expenses of nonprofit institutions, and the value of food, fuel, clothing, rental of dwelling and financial services received in kind by individuals" (Hildebrand 197-98). Owner-occupied dwellings are estimated at rental value, but the purchase of residences is categorized under Gross Personal Domestic Investment. The realm of goods considered in PCE is divided into durable and nondurable goods. This distinction is important in terms of the low percentage of change that is the general rule for the former category and the relatively erratic progress of in the latter--which constitutes a more telling economic indicator. The next type of expenditure is Gross Private Domestic Income (GPDI). This includes expenditures in two categories: fixed capital goods and inventory investment. Fixed capital goods include equipment, machinery and nonresidential structures purchased by private businesses and nonprofit institutions, and it is here that the purchase of residential dwellings is included. Depreciation is also figured into GPDI as the market value of those capital goods that are replaced within the year--either because they are worn out or
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Some common words found in the essay are:
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Approximate Word count = 1793
Approximate Pages = 7 (250 words per page)

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