Flashcards: Understanding GDP: Measurement and Comparison — 14 cards

GDP — definition?

Total market value of all final goods/services produced within a country during a period.

GDP calculation methods — how many?

Three methods: expenditure, income, and value-added approaches.

Components of GDP — main ones?

Consumption, investment, government purchases, net exports.

Expenditure approach — focus?

Summing all spending on final goods and services.

Income approach — focus?

Total incomes earned by factors of production.

Value-added approach — focus?

Value added at each production stage to avoid double-counting.

Using GDP — purpose?

Compare economic size, growth, and standard of living.

Real vs Nominal GDP — difference?

Real adjusts for inflation; nominal uses current prices.

GDP deflator — role?

Separates inflation from real growth in GDP.

GDP per Capita — meaning?

GDP divided by population, indicating average economic output per person.

Nominal GDP — calculation?

Using current prices, not adjusted for inflation.

Real GDP — calculation?

Using constant base-year prices to measure true output.

Inflation — effect on nominal GDP?

Can cause nominal GDP to rise without actual production increase.

Importance of distinguishing GDP types?

Ensures accurate assessment of economic growth and living standards.