GDP = GDE = GDI

• This is an identity that says GDP = GDE = GDI
• So gross domestic product is equal to both the gross domestic expenditure and gross domestic income.
• The reason why this is can be seen by this example:
  • If you produce $\mathrm{\$}100$ worth of stuff, and sell for $\mathrm{\$}100$ as well. Then the GDP is $\mathrm{\$}100$, someone buys it for $\mathrm{\$}100$ so GDE is $\mathrm{\$}100$. Your income is also now $\mathrm{\$}100$ as you got that money.
• Example:
  • ECO102 - Week 01, p.1
  • $$\begin{array}{ccccccccccc}\text{Good}& \text{Output}& \text{Farms}& \text{Mills}& \text{Baker}& & \text{C}& \text{I}& \text{G}& \text{X}& \text{Im}\\ \text{Wheat}& 1000& & 1000\\ \text{Flour}& 1600& & & 1600\\ \text{Bread}& 3000& & & & & 3000& 0& 0& 0& 0& GDE=3000\\ \\ \text{Revenue}& & 1000& 1600& 3000\\ \text{Inputs}& & 0& 1000& 1600\\ \text{Value Added}& & 1000& 600& 1400& =GDP=3000\\ \\ \text{Revenue}& & 1000& 1600& 3000\\ \text{Inputs}& & 0& 1000& 1600\\ \text{Wages}& & 600& 400& 700\\ \text{Profit}& & 400& 200& 700\\ & & 1000& 600& 1400& \text{GDI}=3000\end{array}$$
  • The Farms Mills Bakers column are intermediate inputs.
  • GDP balances GDE