The document defines GDP and its components. GDP is the total value of all goods and services produced in a country in a year. It has four main components: consumption (C), investment (I), government spending (G), and net exports (X). The formula for calculating GDP is GDP=C+I+G+X. Nominal GDP includes inflation, while real GDP is adjusted for inflation. An example shows how to calculate GDP given values for C, I, G, and X. The components of GDP like consumption, investment, and government spending are also defined. GDP impacts economic activities like business planning, currency values, government policies, and interest rates.

1. Macro-Economics Presentation
Presenting By:
 Muhammad Shahmeer (AF-1022)
 Usman Mehmood (AF-1010)

2. GROSS DOMESTIC PRODUCT
(GDP)

3. WHAT IS GDP ???

4. DEFINITION
GDP is the broadest quantitative measure of a
national total economic Activities.

5. DEFINITION
GDP is the total value of everything produced by
all the people and the companies of a country.

6. DEFINITION
The gross domestic product (GDP) is the most
comprehensive measure of a nation’s total output
of goods and services.

7. Types of GDP

8. Nominal GDP
Nominal GDP is a GDP which evaluated at current market
prices, it includes changes in prices due to inflation or a
rise in the overall price level.

9. Real GDP
Real gross domestic product (GDP) is the inflation-
adjusted dollar value of all goods and services produced
during a stated period.

10. How to calculate real GDP
Real GDP = Nominal GDP / GDP Index Price
For Example
Nominal GDP in a year = $123 Billion
GDP Index price = $1.1 Billion
Real GDP= 123 / 1.1
Real GDP= $111.81 Billion

12. HOW TO CALCULATE GDP???

13. Formula
GDP = C + I +G + X
C = Consumption.
I = Gross investments.
G = Government Purchases.
X = Net Export.

14. FOR EXAMPLE
Total consumption of a Country in a year is $90 Billion, Total
Government purchases is $20 Billion, Investment is $15 billion
and Net Export is -$6 billion in this year. Calculate GDP in this
year.
GDP = C + G+ I + X
GDP = 90 + 20 + 15 + (-6)
GDP = 90 + 20 + 15 – 6
GDP = $119 Billion

15. Components Of GDP

17. 1-Consumption (C)
Total Spending of good and services by Household in
a Country
Includes:
 Spending on Food
 Rents
 Spending on Education & etc.

18. Durable Goods
The products have long life and usable for a long time
period.
Include:
 Refrigerator
 Washing Machine
 Cars & etc.

19. Non-Durable Good
The products that we not store for a long time, these are use in
daily routine life.
Include:
 Milk
 Vegetables
 Fruits & etc.

20. Services
Intangible Activity to help peoples to get money.
Includes
Transportation
Medical Treatment
Education & etc.

21. 2-INVESTMENT ( I )

22. 2-Investment ( I )
Spending money with the hope that it will generate
income in future.
Includes:
 Start a Business
 Purchase Shares
 Purchase a Property

24. 3-Government Spending (G)
Spending by a public sector on Development of a
country.
Includes:
 Spending on Infrastructure
 Spending on Power projects
 Military Expense & etc.

25. 4-Net Export (X) or (X-N)

26. 4-Net Exports (X)
Difference between Export and Import of a country
within a Year. Its also called Balance of Trade.
For Example
Exports of country is $28 Billions and Imports is
$20 Billions in a Year.
Net Exports = 28-20 = $8 Billions

27. Impact of GDP on Economic
Activities

28. Impact of GDP on Economic
Activities
 Business Planning
 Change in value of Currency
 Government Policies
 Interest Rate Changes