The Measurement of Gross Domestic Product
A. Definition of Gross Domestic Product (GDP): the market value of all final goods and services produced within a country in a given period of time.
B. “GDP is the Market Value...”
1. To add together different items, market values are used.
2. Market values are calculated by using market prices.
C. “...of All...”
1. GDP includes all items produced and sold legally in the economy.
2. The value of housing services is somewhat difficult to measure.
a. If housing is rented, the value of the rent is used to measure the value of the housing services.
b. For housing that is owned (or mortgaged), the government estimates the rental value and uses this figure to value the housing services.