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What is Gross Domestic Product (GDP)?

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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: http://bit.ly/1R1PL5x Ask a question about the video: http://bit.ly/1p4ZtxL Next video: http://bit.ly/1mY2bn0 Help us caption & translate this video! http://amara.org/v/HZv3/
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Text Comments (190)
Nicku V (2 hours ago)
We ca have FG prodused but NOT sold. This will go in STOCK. if we sell the stock next year=> will enter in GDP of next year? Me I would rather take in considrstion the specific cls VII account , than cash...
Tafadzwa Chitsiku (1 day ago)
here because i'm taking ECON. thanks!
srihari k (9 days ago)
What about remittances ?? How does that money contribute to gdp of a country??
Boma beddie memberr (17 days ago)
wow thanks for making this so easy to understand! i get it now. subscribed and looking to watch more videos
Rayan Al-Ballaa (18 days ago)
what about a computer designed in California but made in China?
Ted Breslow (20 days ago)
WTF happened towards the end?
J (27 days ago)
You don’t count the eggs the baker uses as finished goods but didn’t the baker buy it as a consumer from someone else?
IIMRA (28 days ago)
na. Naj (29 days ago)
When a person buys egg how do u wanna know whether that person wants to cook cake or omelet in order to count it in GDP?
Kavya Kavi (1 month ago)
Kono_Appu (7 days ago)
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?
artiyom (1 month ago)
Question: what class in a college you should take if you want to learn about all of these? Is it Economics 101? Business?
This topic would typically be in a Principles of Macro class as well as a intro econ/survey class. -Roman
Mr. Tabares (1 month ago)
So American brands like Nike that make their products in China get the GDP or does China get it?
Bino Dino (2 days ago)
China gets it
tavi john (1 month ago)
we don't need money because we can make resources with nuclear transmutation so we can make every element from nature in the laboratory. we don't need energy from fossils because we can replace it with nuclear fusion. so we dont need at all an economic sistem, we can live simply by producing resources at home by transmutations , by create food with stem cells, by replacing the savage sexual model of today with genetic engineering thus replacing evolution by competition.
Drew Acabu (1 month ago)
Rodney Nichols (2 months ago)
Elizabeth Waite (2 months ago)
why is it gross? does it need to shower? lol
Yash Vardhan (2 months ago)
Thank you.
krishna chaitanya (2 months ago)
Crystal Clear video ... Thank you for this video 👍
Are the videos on here the same as the course?
C P (3 months ago)
Mark B (3 months ago)
Let's say a bunch of houses are built, but are not sold until next year at highly inflated prices. Do we use houseprices in the year of completion to estimate their worth then, or count them next year when sold for the first time?
Karan Madhu (3 months ago)
cant say anything you are just awesome
ramkumar nadar (3 months ago)
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?
SBianca DC (2 months ago)
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.
Dcoin (2 months ago)
What's the point of producing a lot of goods when nobody buys them. Only idiot company will do that. No demand = no production.
Aoi 10969 (3 months ago)
i want to ask the same question!
Mario Barbosa (3 months ago)
Seriously...THANK YOU!!!
yiyi lee (3 months ago)
Jackson Rowan (4 months ago)
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.
Luke (4 months ago)
Does the labor you sell to your employer count as a capital good and therefore included in the gdp or as an unfinished good, and not counted?
Stan Regec (4 months ago)
GDP is for idiots. Idiots believes it.
A- DOG (4 months ago)
How do countries actually count each n every good n service produced in their territory,esp if there is unorganised sector or is it just an estimate of a basket of goods n services???
A- DOG (4 months ago)
What if the house is resold at appreciated price??? Would the difference/increased value be counted in d yr of sale???
andivlogs (4 months ago)
So helpful, thank you! 😊
Andreas Christianto (4 months ago)
just watch this one video, i click the subscribe button
Shreyash The Slayer (4 months ago)
*_But what's Is GDP PPP ????_*
Nikunj Ranka (4 months ago)
So China manufacturers iPhone for Apple Inc! So China is producing good! So the production of iPhone will be calculated in US GDP or China's GDP? Because iPhone belongs to Apple which is American Company but they're been produced in China. Please reply
Amrit Saikia (2 months ago)
It is produced in China for its cheap labour. Apple USA then buys it from China and resells it at a higher price. This is added to USA's GDP while the cost of assembling is added to China's GDP
Morad Qunaibi (5 months ago)
wow amazing explanation sir
Genuine Gyan (5 months ago)
What an awesom video
domo so (5 months ago)
thank god! this is even better than spending an hour on a GDP lecture
Paja Khan (5 months ago)
2:38 so if a computer made in usa & exported to france for $1500, are we adding 1500 in USA GDP OR the price France sold it for to their consumer (lets say $2000?)
Washim Reza (5 months ago)
Erich L. Ruehs (5 months ago)
So the most recent GDP is 4.1%. Does that mean Trump is still evil? Seriously …. isn't that kind of a good thing
Erich L. Ruehs (4 months ago)
Just recently Obama is taking credit for this most recent and wonderful GPD. Funny part is when he was POTUS, and the GDP was in the toilet, he told us that was the "new normal." And, it would have been if not for Trump. Just a fact devoid of emotion
Cole Lockridge (4 months ago)
Yeah. The left tends to argue with emotions rather than facts....
Shane Whitefeather (5 months ago)
You know what GDP is?  4.1% under President Trump.  Much, much lower under Obama.  That's what GDP means
Ayuba John (5 months ago)
I can see why are considered are poor continent. Africa should stop importation are produce to export
Mohamed Osama (5 months ago)
buyhing things software is counted in gdp?
Mohamed Osama (3 months ago)
Mark B (3 months ago)
Business investment
علي اكريم (4 months ago)
DiamondBones007 (5 months ago)
what about GDP displayed as a percentage %? https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country
Faizan Sayed (6 months ago)
Amadeu CryptoVida (6 months ago)
Great video clear and concise explanation.
Myrrh Greenwich (7 months ago)
banks close, for example, we do not deserve more service, but they have not offered rent, but we have paid for it ... suddenly 2 x 10 € red; without any announcement, poverty prevention;?!?
Myrrh Greenwich (7 months ago)
Why should they not import polar bears, in their climate perspective, because the costs are higher than the benefits, especially if it goes beyond human GDP before the actual costs are calculated, look at the importance of inflatable mathematics', tax sent back to the stern, gaining interest's but not taxed on the paid-load, crooked really
hamza shetranjiwala (7 months ago)
What if a product is made in another country, imported and the sold to another country? For e.g. if a phone produced in China is imported to the us and then sold to France?
jadekayak01 (7 months ago)
the amount of pubic hair washed down a domestic shower😫
Md. Monaem Hossen (7 months ago)
Da Math Geek (8 months ago)
Awesome video keep it up
Joseph Agustin Flor (8 months ago)
So Industrial Products don't count as part of GDP? Am I right?
Jon Éric Martin Murua (8 months ago)
Alguien de Armentia estudiando?😂
Özlem Azan (9 months ago)
Kinza Hamiz (9 months ago)
Amazing explanation
Andrew Cole (9 months ago)
awesome video
Raghu Ram (9 months ago)
If the price of farm produce is inclusive of capital deployed, will that capex for ex tractor cost still counted under GDP? Unfortunately Yes
Muneer Ahmed (9 months ago)
Musarit Rashid (9 months ago)
Abishek Shrestha (9 months ago)
Ajay vishwakarma (10 months ago)
Thanks sir giving this great information with great presentation
Yang-Yi Shen (10 months ago)
what if a piece of the tractor gets stuck in the corn that's sold?
Davit Janashia (10 months ago)
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?
Digvijay Joshi (10 months ago)
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?
spartan azeez (4 months ago)
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.
ariel juarez (10 months ago)
Can someone explain the polar issue? My teacher says he has listen to this video so many times to teach his classes, but he never understood the polar part.
Kleo3392 (10 months ago)
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?
Bino Dino (2 days ago)
I’ve had to figure most of the stuff up my self
Fancy Me (3 months ago)
Kleo3392 they do now i have a test on it tomorrow
Faizan Sayed (6 months ago)
Its almost everywhere I believe, this how its taught at school level that no one understands.
Angus McLaughlin (10 months ago)
WOW THX, gr8 vid
immu immu (11 months ago)
great video !! presentation and animation made it so easy to understand the GDP !! thanks for uploading
Burhanuddin Jetpurwala (11 months ago)
How polar bear is related to GDP .... GDP is all about the product so why a living organism is included in it..?
Polka Productions (5 months ago)
Burhanuddin Jetpurwala *r/whooooooooooooooooooosh*
Faizan Sayed (6 months ago)
Exactly humour is also needed while teaching.
M Mans (8 months ago)
*The polar bear idea was just a funny example (a joke!) to explain that only finished products are included in the GDP. Anything else, including the polar bear, is NOT.*
Frankie Sun (11 months ago)
sponsored by fred
Ecolanguage (11 months ago)
I am animating a flowchart language to illustrate macroeconomics. Here is a playlist: https://www.youtube.com/watch?v=8I8pWPg63G8&list=PLT-vY3f9uw3BkJHy62KKMA6GJuJnBfOgz
Guilherme D. (1 year ago)
very good production/editing as well
Guilherme D. (1 year ago)
great analogy!
Anthony Wilson (1 year ago)
do natural resources count ....like oil and gas...etc
VINNUSAURUS (1 year ago)
how does government know if a good or service is finished ?
Matthew Hemmings (2 months ago)
Kaguya haduh Onless they want the visit of the tax inspectors (IRS, CRA, etc.) they better keep their accounts up to date.
Kaguya haduh (2 months ago)
+郭栋 how about small bussinesses? as far as i know these dont have much details about their sale
Phat Aphiwatanakoon (8 months ago)
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.
郭栋 (11 months ago)
Tax reports, so finished goods traded in black market don’t count
Rajshi Vallabhi (1 year ago)
Love these videos
Wyatt Albert (1 year ago)
Thank you for a straightforward video.
Sharukh Aslam K (1 year ago)
dalurin zinia (1 year ago)
this video explains everything so clearly and in a simple-to-understand manner, thank u so much for making this video !!
Jonkenty Hibionada (1 year ago)
so when a product is label "made in china" , therefore it adds to china's GDP. is that how it works?(reply pls)
dalurin zinia (1 year ago)
i think so....coz he said things that are made within a country and sold to another country..... so Product A is made in China and is sold at 100Dollars to Belgium, then that 100 Dollars will be part of China's GDP
João Paredes (1 year ago)
What software did you use to make this video? Thank you!
We mostly use Adobe tools - Premiere and After Effects. -Roman
divya Sekhani (1 year ago)
do we include sale of animals like horses, camels or say cattle in gdp? Also, if I'm constructing a house for my own use, then at what stage do I include it in Gdp? I was even wondering if plants, trees (bamboo, sandalwood, flowering plants) are included in Gdp?
Imy (1 year ago)
Very well explained. Easy to understand. Subscribed!
Gabriel Gabro (1 year ago)
Realy nice....thank you for your efforts
Mohamed Amiin (1 year ago)
Thanks mru university
Hassan Beila (1 year ago)
why you deleted Arabic translation??
Hassan Beila (1 year ago)
thank you for your reply and please keep going your explanation is much 😩better than my professor
Hello, Thanks for you interest - we haven't yet created Arabic subtitles for Macro yet, only Micro. But thank you for asking as it helps us know which languages to prioritize! -Roman
Patel Vidhu (1 year ago)
Gdp is value of all finished goods in a country in a year.
Simon La (1 year ago)
For example, if China sells US a finished product, but the US resells the same finished product at a higher price, does the profit go to the US GDP or none at all?
Chrissy T. (1 year ago)
Love this video. It's so cute.
Michi koxx (1 year ago)
nice one! thx !
Iain Doran (1 year ago)
What if France sells a good for $1000 to the US and the US taxes that import by 20%? Would that $200 dollars be counted as US GDP?
Matthew Hemmings (2 months ago)
Iain Doran Nope, the US might use this 200 $ to buy other services (school teacher, etc.) which will then be counted in GDP.
Faizan Sayed (6 months ago)
If it will not be counted in GDP, then where will it be counted. I mean the 20℅ import tax.
bdabest3 (8 months ago)
Somnath thorat (1 year ago)
Wasim Anis (1 year ago)
Sir, please provide some video lectures on Public finance theories
Asma Nusairi (1 year ago)
I loved the videos, thank you alot !!
Farzad Sole (1 year ago)
Thank you so much for this useful and informative video, keep up the good work guys :) Many thanks Greeting from Iran ❤ Cheers
JOSE BARRO (1 year ago)
Is it true that, lets say a huge wave wipes out a large part of a country and the other half goes full out rebuilding it. Would that make the GDP rocket up even if the counrtry is in a worse state then before the wave? If so is the GDP really a good measure of how good a country is doing?
Zimu Zeng (1 year ago)
JOSE BARRO Regardless what Im trying ti say is ghat productive potential falls
JOSE BARRO (1 year ago)
By saying half I was clearly exagerating
Zimu Zeng (1 year ago)
If half of the country gets wiped out, then the productive capacity would also drop by half. So even if the country goes full out rebuilding, there's no way the GDP can be higher than before, since the productive capacity has fallen. But yes you're right, the GDP in this case would be overestimating the standard of living, since most of the GDP is going towards rebuilding the country, rather than producing consumer goods that raise standards of living.
Adriano Mattia (1 year ago)
JOSE BARRO look at the broken window fallacy. in a nutshell: the economy "grows" after the disaster, but if it wasn't for the disaster, we would have produced more. There's an hidden cost
KiwiboiNZ (1 year ago)
So a car made in Mexico by an German company will add to the mexican GDP?
Ranveer Vikhe - Patil (8 months ago)
Aristotele il filosofo No, as most amount of the profit money will go back to Germany.
Adriano Mattia (1 year ago)
KiwiboiNZ yes
yağmur albayır (1 year ago)

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