BY: YINGYING CAO, XUESONG CHEN,

BLADIMAIR RAMIREZ AND SUSAN CHU

GDP

What is GDP?(Gross Domestic Product)

Definition: The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. 

Formula: Y = C + I + E + G

where Y = GDP C = Consumer Spending I = Investment made by industry E = Excess of Exports over Imports G = Government Spending

http://www.investorwords.com/2153/GDP.html

Included in GDP Example 1: IPhones belong to the American Apple company and they are

included in the United States GDP. For instance, a newly house will include in United States GDP, because it is produced in America. However, the lumbers, nails, shingles, windows and other items used to produce this house will not be included in GDP. These are called intermediate goods, and their value could include in the price of the complete house. Therefore, only the price of this newly completed house would be added to United States GDP.

Example 2: IPhones belong to the American Apple company and they are included in United States GDP when they are produced in the United States. However, most of the iPhones are made in China. Those iPhones are included in China GDP instead of United States GDP even though they are still belong the American Apple company.

http://money.cnn.com/2012/09/10/technology/jpmorgan-iphone-gdp/

Not included in GDP

 Not included in the GDP are government social security and welfare payments, current exchanges in stock and bonds, and changes in the values of financial assets. Since GDP measures the market values of goods and services, economic activities that do not pass through the regular market channels are excluded in the computation of GDP. GDP doesn't include activities that go on in black market channels. This is particularly important to note when looking at third world countries that may have a significant part of their economy involved in the sale of black market goods, in which case their level of productivity would not be accurately reflected by looking at GDP. 

Income Approach It is one of the three major groups of methologies called Valuation

approaches used by appraisers. It is particularly common in commercial real estate appraisal and in business appraisal.

Areal estate appraisal method that allows investors to estimate the value of the property based on the income product.

Example: -Suppose an economy’s entire out put is cars and trucks.-All employed citizens, therefore, would work in the car and

truck industry, or for it’s supplies.-The combined selling price of all the cars and trucks reflects

the money paid to all the people who helped build the vehicle s.- The economy’s GDP for this year, then, is the sum of the

income of all it’s working citizens, or $350,000.

Conclusion

In conclusion, GDP results of final goods and services produced in a country in a given year . Included in GDP are for example houses that are made in the U.S and the extra things; the intermediate things that do not include in GDP.