1. Net exports are (Xn)=Exports(X)-imports(N).
Exports increase the overall
domestic production as the nation produces more goods and sells them
worldwide. Imports decrease the overall domestic production as the
country buys things from foreign countries. When a country’s imports
exceed its exports, it could result in a negative amount in net exports.
2. Nominal GDP measures the total value of goods produced in the current
market, but it has not been adjusted. Real GDP adjusts for changes in
price and accounts for factors like inflation, making it more accurate than
nominal GDP.
Real GDP is more accurate and reliable than nominal GDP because it
focuses more on actual production and accounts for price change and
inflation. Adjusting and contrasting prices allows Real GDP to be
measured more precisely. The GDP index measures the price of goods
and services produced; it’s also a method to determine Real GDP. Its role
is to help differentiate between Real and Nominal GDP by adjusting price
levels.
1. interest and profits are counted as GDP as it’s part of the income approach
2. Transfer from the government may not count as GDP because it’s like a
private or governmental transaction
3. Unpaid services is non-market activity, so it's not counted as GDP
4. The income of the counselor is counted in GDP because there are the
services or goods provided
5. Monthly allowances for students are not counted in GDP because they are
private transactions from their family members.
6. Transaction in automobiles is not GDP because it’s second-hand transfer,
nothing new or being produced.
7. Publications and books are counted in GDP because it’s new products and
it contributes to GDP
8. Leisure is not included in part of the GDP measure because it’s a
shortcoming of GDP
9. Business inventory is counted in GDP because there is a product being
produced and sold, so it contributes to the GDP
10. Stock transactions are excluded from the GDP
