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Module 10 The Circular Flow and Gross Domestic Product KRUGMAN'S MACROECONOMICS for AP* Margaret Ray and David Anderson What you will learn in this Module: • How economists use aggregate measures to track the performance of the economy • The circular flow diagram of the economy • What gross domestic product, or GDP, is and the three ways of calculating it The National Accounts • National Income and Product Accounts • Reliability The Simple Circular-Flow Diagram The Expanded Circular-Flow Diagram Gross Domestic Product • Final goods and services • Intermediate goods and services • GDP • Value of all goods and services produced (value added approach) • Aggregate Spending (C + I + G + XN) • Total Factor Income The Components of GDP What's Included Not Included Intermediate goods and services Inputs Domestically produced final goods and services, including capital goods, new construction of structures, and changes to inventories Used goods Stocks & Bonds Foreign produced goods & services
