GDP Flashcards
Definition of Gross Domestic Product
The total value of goods and services provided in a country within a year.
Definition of GDP Per Capita
Formula for GDP Per Capita
Measures a country’s economic output per person
GDP divided by total population
Definition of Gross National Income
The sum of a countries GDP plus net income from abroad.
Definition of Nominal GDP
GDP given in current prices, without any adjustments for inflation.
Definition of Real GDP
GDP given in current prices, adjusting for inflation.
Definition of Value-Approach
A method to measure the size of economies by the price of the goods they produce.
Definition of Volume-Approach
A method used to measure the size of economies by the amount of goods produced.
Limitations Of GDP (5)
Does not incorporate measure welfare
Does not include externalities
Only includes market transactions
Does not say what is being produced
Does not include income distributions
Definition Of Purchasing Power Parity
The rates of currency conversion that try to equalise purchasing power of different currencies.
Why Is Purchasing Power Parity Useful?
Allows economists to compare countries economic productivity and standards of living.
Formula of Purchasing Power Parity
Cost of Good X in Country 1/ Cost of Good X in Country 2.
Definition Of Recession
Two consecutive quarters of falling real GDP.
