UNIT 2: GDP 1/29/16

There are two ways to calculate GDP: Expenditure and Income approach.
Expenditure is more reliable as the values cannot be easily falsified unlike the Income approach
To calculate GDP the expenditure way, you add:

1. Consumer Expenditures 
2. Gross Private Domestic Investments
3. Government Purchases
4. Net Exports (Exports - Imports)

To Calculate GDP the income way you add together:

1. WRIP (Wages, Rent, Interest, Proprietor's income)
2. Stat adjustments (Indirect business taxes, Depreciation(Consumption of Fixed Capital), and Net Foreign Factor Payments )

There are two ways to calculate National Income, you can add together;

1. Employees compensation (wages, SS, pension plans)
2. Rent (income for property owners)
3. Interest Income (loaners' income)
4. Corporate Profits 
5. Proprietors Income (income for partnerships) 

The second way would be to subtract stat adjustments from GDP.

In order to find Disposable National Income, you take National Income and subtract Personal Taxes and add Government Transfer Payments

Net Domestic Product = GDP - depreciation

Net National Product = GNP - depreciation

GNP = GDP - Net Foreign Factor Payment

You calculate if you have a budget deficit or surplus by adding Government Purchases and Government transfer payments and subtracting Government taxes and fee collection.
If you end up with a positive number, you have a budget deficit and if you have a negative number you have a budget surplus.

To calculate a trade surplus or deficit, you subtract exports by imports. If you end up with a negative number, you have a trade deficit and if you end up with a positive number, you have a trade surplus.