Term
| GDP (gross domestic product) |
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Definition
| the market value of all final goods and services produced within a country in a year |
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| consumption - household spending |
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| investment - purchases, production of capital assets |
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| net exports - spending on exports minus spending on imports NX = X - M |
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| exports - goods or services produced domestically and purchased by foreign buyers |
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| imports- goods or services produced overseas and purchased by domestic buyers |
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| who gets the money - the sum of al the wages earned by workers and the profits that businesses earn 'gross domestic income' |
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| the sum of value added at each stage of production |
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gdp measured in today's prices
2023: P1*Q1 + P2*Q2 + P3*Q3…
2020: P1(2020)*Q1(2020) + P2(2020)*Q2(2020) |
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GDP measured in constant prices
2023: P1(2012)*Q1(2023) + P2(2012)*Q2(2023 |
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Y1-Y0/Y0 *100% (annual)
(or Yt[time]-Yt-1) |
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Nonmarket activities are excluded
The shadow economy is missing
Environmental degradation is not counted
Leisure doesn't count
Ignores distribution |
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| 3 different ways of measuring GDP |
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Definition
- by adding up every dollar of spending
- by adding up every dollar's worth of output produced
- by adding up every dollar of income earned |
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| a generalized rise in the overall level of prices |
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| most widely used inflation measurement |
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| an index tha ttracks the average price consumers pay overtime for a representative 'basket' of goods and services |
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| the annual percentage increase in the average price level |
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| ( price level this year - price level last year / price level last year ) *100 |
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| The total spending on all final goods and services |
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Definition
| the sum of all the wages earned by workers and the profits that businesses earn 'gross domestic income' |
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