GDP = GROSS DOMESTIC PRODUCT; PRICE CHANGES AND THE CPI

1. Recall that in we identified Gross Domestic Product (GDP) as: Primary Domestic Output of all economic activity. This identification requires us to be clear about what is meant by Domestic, and what is meant by Primary. Consider first the definition of Domestic. It is important in this regard to understand how Imports and Exports are treated. Answer these two questions in this regard:

a)Imports are goods and services created in other countries, but imported to the U.S. Q: Are Imports from other countries included in the U.S. GDP or not?

b)Exports are goods and services created in the U.S., but purchased by persons or entities in other countries. Q: Are Exports to other countries included in the U.S. GDP or not?