ECONOMIC

Macroeconomics

The study of the economy as a whole and how the major sectors of the economy interact.

Gross Domestic Product (GDP)

The total value of all final goods and services produced within a country in a given year.

GDP Formula

C + I + G + (X - M)

Personal Consumption (C)

The total expenditures on durable goods non-durable goods and services.

Durable Goods

Long-term purchases that are expected to last (e.g. cars appliances).

Non-Durable Goods

Short-term purchases that are consumed quickly (e.g. food clothing).

Gross Investment (I)

The total value of all capital goods produced in a year and the change in value of business inventories.

Fixed Investment

Spending on office space factories and capital goods like new machinery and office equipment.

Nominal GDP

GDP expressed in current prices without taking inflation into consideration.

Real GDP

GDP that adjusts for price changes and takes inflation into consideration.

Net Exports (X - M)

The value of a country's total exports minus the value of its total imports.

Four factors of economic growth

Natural Resources, Human Capital, Physical Capital, Tech

Economic Growth

An increase in a nation’s real gross domestic product (GDP).

Real GDP per Capita

A nation’s real GDP divided by its total population. This is the primary measure used to determine a nation's standard of living

Capital Deepening

An increase in the ratio of capital to labor. This occurs when the amount of capital per worker increases, leading to higher productivity.

Productivity

The amount of output produced from a set amount of inputs.

Human Capital

The skills, knowledge, and experience possessed by an individual or population

Physical Capital

Human-made goods, such as machines and tools, used to produce other goods and services

Real GDP

This is the nominal GDP adjusted for changes in prices (inflation). Economists use a "base year" to compare prices across different years, allowing them to see if the economy actually produced more goods and services or if prices just went up.

Nominal GDP

This is the gross domestic product stated in terms of the current value of goods and services. It does not account for inflation

Capital Deepening

An increase in the ratio of capital to labor (providing more/better tools or training to workers).

multifactor productivity

ratio between an industry’s economic output and its labor and capital inputs.

Capital Deepening

An increase in the ratio of capital to labor (providing more/better tools or training to workers).

Multifactor Productivity

The ratio between an industry's economic output and its labor and capital inputs