MEA-1.A—a. Define (using the circular flow diagram as appropriate) how GDP is measured and its components. b. Calculate nominal GDP

a. Define (using the circular flow diagram as appropriate) how GDP is measured and its components. b. Calculate nominal GDP.

• GDP is a measure of final output of the economy.
• GDP as a total flow of income and expenditure can be represented by the circular flow diagram.
• There are three ways of measuring GDP: the expenditures approach, the income approach, and the value-added approach.
• Enduring understanding MEA-1: An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate.