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Gross Domestic Product (GDP)
The market value of final goods and services produced within a country in a given time period.
Nominal GDP
The value of all goods and services produced at current prices.
Real GDP
GDP adjusted for changes in prices to reflect true economic growth.
Expenditure Approach
A method to compute GDP by summing consumption, investment, government spending, and net exports.
Income Approach
A method to compute GDP by summing the incomes earned by factors of production.
Market Value
The total value of goods produced calculated by multiplying quantity by price.
Final Goods and Services
Products that are purchased for final use and not for further processing or resale.
Intermediate Goods
Goods used in the production of final goods and are not counted in GDP.
GDP Deflator
A measure of the level of prices of all new, domestically produced, final goods and services in an economy.
GDP per capita
A measure of a country's economic output that accounts for its number of people.
Household Consumption (C)
Total goods and services consumed by households.
Business Investment (I)
Expenditures by businesses on capital goods that will be used for future production.
Government Expenditure (G)
Spending by government on goods and services.
Exports (X)
Goods and services produced in a country and sold to buyers in other countries.
Imports (IM)
Goods and services produced abroad and purchased by residents of a country.
Percentage Change Formula
To find the percentage change: [(New_Value – Old_Value) / (Old_Value)] x 100.
Underground Economy
Economic activity that is not reported to the government and is thus not included in GDP.
Limitations of GDP
GDP does not account for factors like health, environment, and unpaid work that affect well-being.
