ABSTRACT
Gross domestic product (GDP) is the most widely used measure for the economy. As you will remember from Chapter 10, it can be measured by adding up the market value of all consumer expenditures (C), investments (I), net government expenditures (G − T), and net trade (EX − IM). And when divided by population size, we get GDP per capita (GDPpc), which allows us to compare well-being between countries. Net domestic product (NDP) subtracts depreciation from GDP, which is on average 10 per cent. Gross national product (GNP) only includes what is produced by nationals: it adds income earned by nationals abroad and subtracts income by foreigners earned in the country. By definition, domestic product equals domestic income, and national product equals national income. So you can use the labels ‘product’ and ‘income’ interchangeably.
