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What is Gross Domestic Product (GDP)?
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- Опубликовано: 15 авг 2024
- Picture the economy as a giant supermarket, with billions of goods and services inside. At the checkout line, you watch as the cashier rings up the price for each finished good or service sold. What have you just observed?
The cashier is computing a very important number: gross domestic product, or GDP.
GDP is the market value of all finished goods and services, produced within a country in a year.
But, what does "market value" mean? And what defines a "finished good"?
These, and more questions, percolate inside your head. Meanwhile, the cashier starts ringing up the total, and you’re left confused. An array of things pass by you - A bottle of wine. A carton of eggs. A cake from the local bakers. A tractor, of all things. A bunch of ballpens. A bag of flour.
In this video, join us as we show you how to make sense of this important economic indicator. You’ll learn how GDP is computed, and you’ll get answers to some pretty interesting questions along the way.
Questions like, “Why are the eggs in my homemade omelet part of the GDP, but the eggs my baker uses are not? Why does my bottle of French wine contribute to France’s GDP, even if I bought it in the United States?”
Most importantly, you’ll also learn why polar bears aren’t part of the GDP computation, even if they’re incredibly cute.
So, buckle in for a bit-in the following videos we’ll dive into specifics on GDP.
Macroeconomics Course: bit.ly/2JjphSP
Interactive practice questions: mru.io/xrt
Next video: bit.ly/2UHwvoV
Help us caption & translate this video!
amara.org/v/HZv3/
00:00 GDP Definition
00:27 Finished Goods
01:33 Capital Goods
02:00 Produced Goods
02:46 Market Value
you guys are far better than my lecturer
Maybe you're just dumb bro
@@AjayPatel-so8zs First of all, becoming a lecturer requires you to know how to keep an audience intrigued. Second, most people just go to work to pay the bills, without love or real interest for what they do. They'll usually just do the bare minimum to make it to pay day. He's not alone on the fact that many youtubers make far better teachers than actual "teachers".
my lecturer uses this video to teach us about GDP 🤷💯💯💯
I don’t even have a lecturer, doing it online :|
ruclips.net/video/rAUoG-1dNgA/видео.html&si=beRqNw5ANDr0rZEz
One big hug to you guys for making these videos and helping neophytes like me to try and understand economics. Thank you
Thank you Shamnah! Good luck to you!
Econ gets a bad rap. It's fascinating once you dig in. That is, if you like understanding human behavior and the consequences!
Best, Roman
Shamnah Usman
@Myrrg Greenwich from Google, neophyte = a person who is new to a subject or activity.
Thanks shamnah, I learned a new word because of you. '' NEOPHYTES''
Faizan Sayed word?
These guys have really made good efforts to make Economics interactive.
Economics is incredibly hard to understand, but this video gave me so much information in such an easy way! Thank you!
This explanation is so broken down, clear and easy to understand and the analogies were spot on. Maybe of this guy was my 12th grade econ teacher, I wouldent have failed with a 58.
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0:23 - market value of all finished goods and services produced and sold in a year
0:49 - GDP = all the sold goods or services
1:06 We don’t count goods that baker buys in GDP - because those products will go into a finished product that will get sold
1:32 To calculate GDP - we seem to only add up goods sold to consumers (not businesses)
2:17 - if an old house is sold this year - but not produced this year - it does not count towards GDP
2:39 - imports add to countries GDP - so if you buy bottle of wine from France, the sale counts towards France’s GDP
Thanks man for making this I respect for your work for making timeline
Money making money is not supposed to be counted as GDP. This is what the Glass-Steagall Act was for.
"Earning" interest rates is counted as GDP. [After the Glass-Steagall Act was repealed]. A business loan is counted as a business expense.
Say if our banks have 75% unsecured bonds on the books. AKA ponzi scheme. That would include GDP.
Home flipping is GDP.
Now. If this financial ponzi scheme "GDP" stops. The world goes into a resection.
Not that building real products ever stopped. Like a stock can go up but the company never sold more products.
Yes. Ponzi schemes count as GDP. This is why if the financial system colaspes, it takes the real products with it. This is the Glass-Steagall Act.
Honestly you guys are better than my lecturer. I understand this way better now. Thank you
using your example, how do the folks calculating GDP know if the eggs were purchased and consumed versus the eggs being purchased to make a finished product?
@@sanctumsomega how does that work exactly? i'm assuming smaller societies buy big quantities of products from bigger societies on a special market, but i might be wrong. can you explain?
Cristea Andrei usually Restaurants buy directly from a distributor or farm instead of through a supermarket
@@eduardd.1086 one before one after I guess
Thanks to this video I could answer the classic "are polar bears counted in GDP?" exam question
Firstly, i wanna thank u for explaining these concepts in a very simplest manner...!!! Now my question is with respect to finished good and intermediate goods..... As you have mentioned if a bakery buys eggs it will not be counted, but if a consumer buys it, it will be counted, so how does the supermarket come to know purpose of buying or i would say how would they come to know if its for commercial use or domestic?
Through store channel i guess, if a retail store is selling than most likely it is for end consumer But if a distributor( distributor are not manufacture) is selling that it will be mostly likely to retailer like super or hyper markets and so on. In Bakery owner product will be on deliverable or reselling. As long as complete Product is delivered to consumer it will be considered. this is my assumption only. so GDP data is collected from 2 points 1 Manufacture 2. point of sales.
@@spartan187 So, would you count cement in the GDP or not ? Cause cement industry is a huge industry but house/building is the finished good here and hence only houses should be counted in the GDP. Wouldn't adding up the numbers of cement industry give an idea of real estate of the country ? Cause counting number of NEW BUILDINGS is a quite a difficult task but as cement industry is dominated by only 3-4 companies here in India, wouldn't it be easy to add up their financials to get an estimate?
I had the same question! What if a baker (or restaurant owner) buys products from a supermarket which are then used in their business to produce a finished good. Seems like the individual products, albeit small in value, would be counted as a finished good at supermarket level and then counted "again" as a finished good at the business level. This example probably doesn't have a "major" effect on GDP, but it's clear GDP is not a perfect number, more like a good estimate of market value.
Clear explanation in layman terms with very simple example. Educational institutions need more teachers like you.
I love these videos. It is very easy to understand and very informative. You are making a huge contribution to this world!
Much appreciated!
-Roman
1.5 hours of boring class in 4.5 minutes in a fine and good peace video. Thanks for making this (:
great video !! presentation and animation made it so easy to understand the GDP !! thanks for uploading
It amazes me how this 4 minute video covers over 50 pages of my college text book, and I understand the subject more though this video.
An absolutely brilliant explanation! Thank you.
Nicely explained.
Thank you so much for this useful and informative video, keep up the good work guys :)
Many thanks
Greeting from Iran ❤
Cheers
6yrs ago and still better explanation than CNBC
this video explains everything so clearly and in a simple-to-understand manner, thank u so much for making this video !!
Simple, clear and to the point, What's not to love
It is also measured quarterly to see where we are in the economic cycle. Two consecutive quarters of negative (falling) GDP indicates a technical recession.
"economics for middle schoolers" meanwhile 99% of American adults: "GDP? is that something to do with climate change? is that a food additive?"
Very well explained, I've learned more economics from ur 4mins video, than wht I've read...ty
thank god! this is even better than spending an hour on a GDP lecture
Thank you so much for sharing this useful data! Greatly appreciated.
Thank you for a straightforward video.
Interesting. Very concise.
Holy crap, I've searched and searched. This video was all I needed.
Very well explained. Easy to understand. Subscribed!
This is amazing holy cow
Thank you!
-Roman
very good production/editing as well
Thank you for all these wonderful videos as i not only ace my exam , i understand the concepts economics and apply them in my everyday life .. Thanks a million.
Wow, after watching many videos this one really helped me out
I got lost with the polar bear example 😂😂
i’m in 10th grade and my economics final is next week...
wish me luck!
marvel marble best wishes!
Bro I’m in 10th grade and in economics to
@@omf13gamer4 Did you pass man?
wow thanks for making this so easy to understand! i get it now.
subscribed and looking to watch more videos
really nice video presentation, simple & easy. Thank you !
Is it me or do they not teach this shit in school, like you’re just supposed to figure it out yourself. Am I the only one who finds economics so taxing, no pun intended?
Its almost everywhere I believe, this how its taught at school level that no one understands.
Kleo3392 they do now i have a test on it tomorrow
I’ve had to figure most of the stuff up my self
Crystal Clear video ... Thank you for this video 👍
way better than my university lecturer.
In my university lecture even the front row is sleeping.
I just love this channel ❤️
Crystal Clear explanation
Great video clear and concise explanation.
Finally someone with a good English, other channels are Indians speaking english
Thank you for such detailed explanation
how does government know if a good or service is finished ?
If I'm not mistaken, this is usually through tax reports of businesses
Tax reports, so finished goods traded in black market don’t count
Value added approach. It takes into account the difference in values of products before and after an operation/production. The good may not be 'finished', but the counting done after that period is only based on the value added after that 'unfinished' product.
@@user-fv3xm4tn9d how about small bussinesses? as far as i know these dont have much details about their sale
Kaguya haduh Onless they want the visit of the tax inspectors (IRS, CRA, etc.) they better keep their accounts up to date.
GDP is really interesting ! I like these stattistics.
Would be handy to mention that this is the output measure method of calculating GDP. Great video though, examples were relevant and on point.
But why we need or calculating gdp?
Waaaw I like ur vedios so easy thanks thanks sir🥰👍👍
thank you and God Bless! and asking for permission to use the information for our tasks in school.
Good teaching 👍
Learnt more from this than my teacher thanks
Definition doesn't include selling of the product. Suppose a slipper reaches a market then it would be included in GDP only if it gets sold but by definition it should be included as it is produced.
Thank You
the video starts saying goods and services produced, then goods and services sold and then again goods and services produced. It's not the same...my question is, if GDP measures goods and services produced (not sold), which information do statisticians gather in order to calculate GDP? Companies' sales +/- inventory variation?
Excellent Video !! I use it for my Instagram tutorials. Incredible channel
So helpful, thank you! 😊
I loved the videos, thank you alot !!
Excellent!
I have a question, why is the tractor considered a finished good when the wheat that the tractor harvested can be made into breakfast cereals, beers, vodka, and breads, so why is it considered a finished good?
Excellent!!!!!
Keep up the good work brother.
Awesome video
I loved your video so much, thank you for the efoort of making macroeconomics clear and easy to understand! Does anybody else have a problem when trying to enter the practice question website? I do not know why but mine isn”t working.
What does it mean when a news report says some percent of a country's GDP is debt? Does it mean this many finished goods are produced from borrowed money?
Thanks for the clear explanation of GDP
Realy nice....thank you for your efforts
Informative and the stock market evaluates the supply and demands of the nations productivity from generation to generation .
YOU SAVED MY LIFE
EASY TO UNDERSTAND THANKS
Love these videos
some of the explanation doesn't cover everything for example if a house has been sold a couple of times within a year which price value would be added to gdp
Do the goods have to be necessary sold to be counted in GDP, even without being sold the goods retain its MARKET VALUE right? So imagine a country produces lots of goods and never sells it, will that be counted in GDP, how does that go about? Anyone willing to clarify?
i want to ask the same question!
What's the point of producing a lot of goods when nobody buys them. Only idiot company will do that. No demand = no production.
My teacher in economics told us that eventhough it wasn't sold but it was produced in a year then it is part of the GDP.
Very useful❤
So GDP only counts what's sold?
If we produce 10 million computers but only sell 1 million, we only count 1 million?
Also, if reports say 3rd quarter GDP rose by +3%, is that in comparison to previous quarter or to previous year's 3rd quarter?
well explained!
giving polar bears as a possible valuable item is really a brutal capitalistic approach. Nevertheless, good vid.
Guys, your videos are great! Thanks a lot!
However I do have a question: The apple computer in your example is actually produced in China but designed in California. So does the finished computer then add on China's GDP or the States' one? Thanks for your answer!
Cheers
GDP can be calculated using the incomes generated from the sale of goods and services. So say Apple sells the computer for $1000. Of this 1000, 200$ must be spent on buying the raw materials (processor, etc) from Taiwan. So Taiwan makes 200$ from the sale of this computer, hence Taiwan gets 200$ GDP. These raw materials are then assembled in China into an actual computer, and let's say the Chinese workers who do this get paid 10$. Then the computer would add 10$ to Chinese GDP. However much money is left (790$), is Apple's profit, which counts towards US GDP. All of these numbers are made up but it illustrates how GDP is split between nations.
An na I think because apple is an American company?
Excellent
Thanks sir giving this great information with great presentation
Thanks for this video now I can understand better
The GDP/ Grotesque Domestic Product, factors in monetary exchanges within a measured short period of time; It typically ignores the long-term destruction caused along.
Question🙋🏻♀️ what if it was a house produced in 2020 but sold for the first time in 2022. Would it be included in the GDP of 2022 or 2020?
In India most of the products are purchased with black money and no bills.
If this is taken in to account,then India will have GDP more than we can imagine.
Seriously...THANK YOU!!!
Good time to learn how terrible the US economy is right now. Thanks for the great video!
Very informative 👍
great analogy!
Bravisimo! Thank you!
So, would you count cement in the GDP or not ? Cause cement industry is a huge industry but house/building is the finished good here and hence only houses should be counted in the GDP. Wouldn't adding up the numbers of cement industry give an idea of real estate of the country ? Cause counting number of NEW BUILDINGS is a quite a difficult task but as cement industry is dominated by only 3-4 companies here in India, wouldn't it be easy to add up their financials to get an estimate?
Also, What do you do about various schemes, subsidies and stimuli given by the government ? Do you add them while counting the GDP or not ?
What are taxes or federal taxes do banks give out money for paying taxes throughout the year or do banks have interest rates???
Awesome video keep it up
Excellent video. I have a question, if mac computer is made in China, is it part of Chinese or US GDP?
I can't tell you how long it's been since I purchased a finished polar bear.
மிக அருமை....!!!
so an intermidiate good is a good used to make and is a part of a finished good
The video is great! Very helpful, thank you! I did not understand only one thing, if for example a country builds a house but it was Not sold within that same year its price would not add up to GDP?