#2 What is GDP? Gross Domestic Product.

GDP= is the market value of all final goods and services produced in a nation during a period. What are implications of GDP? 1. Increase in GDP means more jobs, more income for consumers and better living standard. High GDP countries: Japan, Singapore, USA. 2. Decrease in GDP means less jobs, less incomes for consumers and lower living standard. Low GDP countries, laos, Cambodia, Myanmar. What are counted and not counted in GDP? Counted in GDP It counts only final goods and services. Final goods mean the products that consumers buy and use them. For example buy a new car new iPhone new blackberries.

Not counted in GDP It does not count intermediate goods Intermediate goods are products and raw materials or semi-raw raw material that firms or factories buy. For example buy a sheet of steel to make a car. Counted in GDP Only new products and services are counted in GDP. For example buy new cars new house, new cloth, new laptop. Not counted in GDP Used products second hand products are not counted in GDP. For example, buy second hand cell phones, buy old houses, old buildings. Counted in GDP Only domestically produced goods and services are counted in GDP. For example the Honda of Japan produces and sells cars in Thailand. This is counted as Thais GDP, not Japans GDP. Not counted in GDP.

The Thai products produced in the foreign land. For example the CP produces eggs and chickens in china. This is counted as Chinas CDP, not Thais GDP. Counted in GDP Buying and selling Stocks for the first time will be counted as GDP. Not Counted in GDP Buying and selling stocks after the first time will not be counted. Consider as a second hand product, or just a transfer of ownership. Counted in GDP Only goods and services that are legally produced in nation. For example buying television, lottery, land. Not counted in GDP. Goods and services that are not legally produced in nation. For example illegal drugs, underground market, fake products, illegal gambling, prostitution. Counted in GDP Market transaction For example you eat in the restaurants, your company gives you a bonus, you hire someone to clean the house. Not counted in GDP. None market transaction. For example you cook your own food, your father gives you a birthday present, you clean your own house. Counted in GDP Government services. For example you pay taxes, you pay fines, you pay fee to use express way. Not counted in GDP Government assistance. For example government gives money and food for the refugees, flood victims, tsunami victims. What is GDP equation? GDP=C+I+G+(X-M)

C=Consumption 70% I=Investment 17% G=Government 19% X=Export 5% M=Import -11% The total GDP =100% Net export = (X-M) When X>M, or when we export more than we import, we have a trade surplus. When X<M, or when we import more than we export, we have a trade deficit. When X=M, or when we import and export equally, we have a trade balance. GDP=C+I+G+(X-M) (+) Export GDP Jobs

If (X-M0 is positive or we have a trade surplus, this means the GDP will increase. In other words we export more than we import. We create a lot of jobs domestically. (-) import GDP Jobs

If (X-M) is negative or we have trade deficit, this means the GDP will decrease. In other words, we import more than we export. We loses a lot of jobs to foreign countries. Thai GDP is nominal GDP Nominal GDP is the Market value of all final goods and services produced in a nation during one year. It is the market value of that year. What is real GDP? Real GDP=Nominal GDP Inflation factors. 95%=100% - 5%