National Income: Where t comes From and where丨 t Goes A large income is the best recipe for happiness I ever heard of. Jane Austen The most important macroeconomic variable is gross domestic product(GDP) As we have seen, GDP measures both a nations total output of goods and ser- vices and its total income. To appreciate the significance of GDP, one need only take a quick look at international data: compared with their poorer counterparts, nations with a high level of gDP per person have everything from better child-

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Defintion: GDP is the total market value of all final goods and services produced by a country. Final versus Intermediate: By \final\, we mean the goods and service that are purchased for final use by purchaser and not for resale or further processing. The meaning intermediate is opposite to final. Value Added: GDP not only reflects the market value of final goods and service, but also reflect the income generated from producing these final goods and service