Gross Domestic Product Flashcards
What is Gross Domestic Product (GDP) used for?
To determine the size of the economy at a certain point in time and growth overtime
What does GDP measure?
The total market value of all final goods and services produced in an economy in a given year
What is Total Market Value?
The value of a good or service is determined by the price paid for that item in the marketplace
What is the total value of GDP?
The prices paid for a good/service in the marketplace added together
What are “final” goods and services?
Goods and services sold to an end user
What are intermediate goods?
A good used in the production of final goods and services
What goods and services count in a nation’s GDP?
Only goods and services produced within a country’s borders
True or False? GDP DOES take the national ownership of the business that produces the good/service into consideration
False. GDP DOES NOT take the the national ownership of the business that produces the good or service into consideration
What could an increase in GDP mean?
More goods and services produced, production stayed the same but prices increased, or production and prices increased
What is nominal GDP?
Unadjusted form of GDP
What is Real GDP?
Nominal GDP adjusted for inflation and removed price changes
How is economic growth measured?
By comparing Real GDP over time
How is economic growth presented?
A percentage increase/decrease from an earlier period
When is a recession constitiuted?
When Real GDP has declined for 2 consecutive quarters
What does Real GDP reflect?
The actual increase/decrease in output/production of goods and services
