GDP and GDP Per Capita Flashcards
What is GDP?
gross domestic product is the value of goods and services produced within a set period of time
What four groups contribute to GDP?
households
firms
markets for goods and services
markets for factors of production
What are the three ways to calculate GDP?
household-to-firm spending
firm-to-household spending
all household income
What does GDP per capita do?
GDP per capita makes a more quantifiable measure by removing the variable of country’s population
Why might a country’s GDP increase?
inflation (rising prices)
increasing sales
What are the two types of GDP?
nominal GDP (current prices) real GDP (prices adjusted for inflation)
What are the three categories that GDP per capita can split countries into?
higher income
middle income
lower income
Name four things that GDP can not measure:
quality of life
environment quality
happiness
equality
Name one non-financial thing that GDP can successfully measure:
labour productivity
What are the four expenditures that contribute to GDP?
consumption
investment
government
net exports
How are the net exports of a country calculated?
the income from exports minus the expenditure on imports
What causes a net trade surplus?
more exports than imports
What causes a net trade deficit?
more imports than exports
If GDP is denoted by Y, what is the formula to calculate GDP?
Y = C + I + G + Nx (GDP = consumption + investment + government + net exports)
What are the four categories of sector GDP uses, and what percentage of the UK GDP do they each contribute?
services - 75%
production - 18%
construction - 6%
agriculture - 1%
