ShmoopTube

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Here's your shmoop du jour brought to

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you by exports former harbor towns that just don't know what to do with [Harbor town appears]

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themselves how do we measure a net domestic product and here the potential

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answer a whole bunch of letters and other stuff okay people let's get the

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definitions right for starters net domestic product so the first thing you [Woman writes acronym on chalkboard]

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should be asking is net net of what well we're not talking about what was picked [Man chasing butterfly with net]

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up out of the mid-atlantic and good thing too because some creatures are

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better left where they are well what comes before net gross we've moved on [Men fishing for a whale]

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from that deep-sea terror so gross domestic product is the sum of all goods

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and services that we make domestically that's GDP and yeah sometimes it's gross

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when we say net domestic products we've subtracted one key thing from our

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calculations any guesses mmm-hmm yeah okay in the back row there yeah you [Teacher points to students]

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Janet to get net domestic product we subtract the capital you'd need to

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replace old equipment that went down in value think about it like this we have a

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shoe factory remember that old woman in the shoe with kids who were driving her [Woman standing at shmoop shoe factory]

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nuts you didn't know what to do well when her factory was new and worth five

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million bucks it produced a hundred thousand shoes a

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year well after five years and that factory isn't worth five Meg anymore it

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breaks down and needs repairs and in ten years it'll need to be totally replaced [Shmoop shoe factory in broken state]

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so we could reasonably just the well reduce its value by five hundred grand a

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year and that capital loss or depreciation of equipment gets reflected

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in the net GDP number it's a more true reflection of the real value of goods [Girl blows bubble of goods]

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and services we're producing the other answers are alone they were just red

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herrings C plus I plus G Plus quantity X minus M is one of the classic

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measurements because it takes into account consumption investment

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government spending and the net difference between exports and imports

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and DNE were just gacho's if you didn't show up for class that day so yeah the [Man thinking about sleeping through class]

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answer is a one person who could have told you plenty about capital loss was

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the poet EE coming that guy never had any capital [EE. cummings in a field]

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