Gross Domestic Product Flashcards
Define GDP
the value of goods and services produced in the economy over a period of time.
GDP is a key measure of _____________________
GDP is a key measure of the health of an economy.
What are the 3 ways to calculate GDP
-National Expenditure
-National Income
-National Output
(National income = National Expenditure = National Output)
What is National Expenditure made up of?
Consumption + Investment + Government Spending + Net Exports
What is national income made up of?
Adding up all an economy’s incomes (wages, interest, profiles and rent)
What is national output a measure of
The value of output from each of the main economic sectors.
What are the 4 sectors GDP measures?
-Primary
-Secondary
-Manufacturing
-Quaternary
Factor Incomes of GDP
-Income from people in jobs and self-employment (e.g. wages and salaries).
-profits of private sector businesses
-rent income from the ownership of land.
Definition of Real Gross Domestic Product
-The value of goods and services produced in the economy over a period of time taking into account inflation.
How is Nominal Value expressed?
In monetary terms e.g. current prices.
How is real value adjusted?
It is adjusted for inflation by judging figures against a base year.
How to convert from nominal to real terms
Real value = index of comparison period / index of current period
This value then multiplied by nominal value.
What is Total national income?
The value of all goods and services produced in a country.
What is GDP per capita?
The total income divided by the population of a country.
Why can GDP per capita be a better indicator than GDP ?
Because it is not skewed by the total population of a country.
