Principles of Macroeconomics: Measuring Gross Domestic Product

Vocabulary flashcards covering the definition, components, and measurement of Gross Domestic Product (GDP) from Principles of Macroeconomics.

Gross Domestic Product (GDP)

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

Final Goods

Goods whose value is recorded in GDP, distinct from intermediate goods so that value is counted only once.

Consumption ($C$)

The spending by households on goods and services, with the exception of purchases of new housing.

Investment ($I$)

The spending on capital equipment, inventories, and structures, including new housing.

Government Purchases ($G$)

The spending on goods and services by local, state, and federal governments, which does not include transfer payments.

Transfer Payments

Government expenditures that are not made in exchange for currently produced goods or services, and are therefore omitted from government purchases.

Net Exports ($NX$)

A component of GDP calculated as exports minus imports.

Nominal GDP

The value of the production of goods and services evaluated at current prices.

Real GDP

The value of the production of goods and services evaluated at constant prices.

GDP Deflator

A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100, reflecting the rise in nominal GDP attributable to a rise in prices rather than quantities produced.

GDP per Person

A measure indicating the income and expenditure of the average person in the economy, where a higher value indicates a higher standard of living.